1031 TAX GROUP: Sues Wachovia Corp. for "Inappropriate" Transfer ----------------------------------------------------------------Bloomberg's Erik Larson reported Tuesday that the bankruptcy trustee appointed in the chapter 11 cases of 1031 Tax Group LLC has sued Wachovia Corp. for $140 million for aiding former 1031 Tax Group CEO Edward Okun in transferring $240 million in real estate sale proceeds held by it to "inappropriate" accounts before the collapse of the tax firm and Mr. Okun's arrest. The complaint was filed filed Oct. 3 in U.S. Bankruptcy Court in New York, alleging unjust enrichment and breach of contract.

Five Wachovia units knew "[Mr.] Okun was misappropriating funds from the 1031 debtors," the company's bankruptcy trustee, Gerard McHale, said in the complaint. "Nonetheless, they continued to carry on business as usual with [Mr.] Okun." According to the complaint, "The 'like-kind' or '1031 exchange' lets people sell an investment property and then buy a similar one within six months, indefinitely deferring capital gains taxes."

According to Bloomberg, the suit alleged that Mr. Okun loaned customer funds to "two of his other businesses, Investment Properties of America and Okun Holdings".

1031 Tax Group folded when it failed to return $151 million of funds it held for more than 300 of its clients, Bloomberg says.

According to Bloomberg, the bankruptcy trustee said Wachovia was aware of the alleged fraud, and that Wachovia also transferred money to its own accounts which it used to repay its loans.

"Wachovia was entwined in all aspects of the 1031 debtors' operations, [Mr.] Okun's personal finances and Okun's other businesses," according to the complaint.

Mr. Okun is currently in jail after being indicted for wire and mail fraud in March, according to Bloomberg. A trial has been set for Jan. 19 in the U.S. District Court in Richmond, Va.

Bloomberg says that 1031 Tax Group sued Mr. Okun last month for stealing $5.1 million from the company to purchase a six-bedroom home in New Hampshire.

About Wachovia Corporation

Based in Charlotte, North Carolina, Wachovia Corporation (NYSE:WB) -- http://www.wachovia.com/-- is one of the nation's diversified financial services companies, with assets of $812.4 billion at June 30, 2008. Wachovia provides a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services to customers through 3,300 retail financial centers in 21 states from Connecticut to Florida and west to Texas and California, and nationwide retail brokerage, mortgage lending and auto finance businesses. Clients are served in selected corporate and institutional sectors and through more than 40 international offices. Its retail brokerage operations under the Wachovia Securities brand name manage more than $1.1 trillion in client assets through 18,600 registeredrepresentatives in 1,500 offices nationwide. Online banking isavailable at wachovia.com; online brokerage products and services at wachoviasec.com; and investment products and services atevergreeninvestments.com.

Wachovia is exposed to large mortgage losses as a result of its2006 purchase of mortgage lender Golden West Financial Corp.,according to The Wall Street Journal. The company, WSJ stated,now believes total losses for Golden West's payment option loanportfolio could eventually reach 12%, up from previous forecasts.

Wachovia has lowered its second-quarter results to account for apossible legal settlement. Wachovia said its second-quarter net loss will be $9.11 billion instead of $8.86 billion. It has disclosed a $500 million pretax increase to legal reserves.Wachovia has also disclosed plans to lay off 6,950 people toreduce expenses.

As reported in the Troubled Company Reporter on Oct. 8, 2008,Fitch has upgraded Wachovia's IDR to 'A+' from 'BB-' and placed it on Rating Watch Positive, along with the 'A+' senior debt of Wachovia and subsidiaries, following Wells Fargo & Company's definitive agreement to acquire Wachovia Corporation and subsidiaries.

As reported in the Troubled Company Reporter on Oct. 2, 2008,Moody's Investors Service lowered Wachovia Corporation's preferred stock rating to Ba3 from A3 and placed it under review with direction uncertain.

As reported in the Troubled Company Reporter on Oct. 1, 2008,Standard & Poor's Ratings Services placed all its ratings onWachovia Corp. and Wachovia Bank on CreditWatch with negativeimplications. S&P also lowered its DRD Series J and Kand convertible preferred stock Series L ratings on WachoviaCorporation to 'BB' from 'A-', as these securities will not beacquired and will continue to reside with the new Wachovia.

About 1031 Tax Group

Headquartered in Richmond, Virginia, The 1031 Tax Group LLC --http://www.ixg1031.com/-- is a privately held consolidated group of qualified intermediaries created to serve real propertyexchanges under Section 1031 of the Internal Revenue Code. Thecompany and 15 of its affiliates filed for Chapter 11 protectionon May 14, 2007 (Bankr. S.D.N.Y. Case No. 07-11447 through07-11462). Paul Traub, Esq., Norman N. Kinel, Esq., and Steven E.Fox, Esq., at Dreier LLP, represent the Debtors in theirrestructuring efforts. Thomas J. Weber, Esq., Melanie L.Cyganowski, Esq., and Allen G. Kadish, Esq., at Greenberg Traurig,LLP, represent the Official Committee of Unsecured Creditors. Asof Sept. 30, 2007, the Debtors had total assets of $164,231,012and total liabilities of $168,126,294, resulting in a totalstockholders' deficit of $3,895,282.

ADVANCED MICRO: Fitch's Ratings Unaffected by ATIC Joint Venture----------------------------------------------------------------Fitch believes Advanced Micro Devices Inc.'s announcement that it has agreed to form a foundry joint venture with ATIC (Advanced Technology Investment Company of Abu Dhabi) for semiconductor manufacturing does not have an immediate impact on these AMD ratings:

While the anticipated transaction will improve AMD's liquidity position by approximately $1 billion and likely strengthen the remaining company's operating profile, the current ratings and Negative Rating Outlook continue to reflect the weakened macroeconomic environment and Fitch's expectations for a weaker sales outlook for AMD over the remainder of 2008 and 2009.

Over the coming weeks Fitch expects to gain further clarity to the structure of the JV and the company's financial results. Depending on satisfactory conclusion to these items, Fitch believes the ratings could be stabilized upon completion of the transaction. Over the long term, the consummation of the JV could have a positive impact on the company's ratings due to an improved financial and operating profile and success in achieving market share targets and cash flow measures, which could be strengthened by meaningfully lower capital spending.

ADVANCED MICRO: S&P Keeps Neg. Watch on Joint Venture Contribution------------------------------------------------------------------Standard & Poor's Ratings Services said that its ratings on Sunnyvale, California-based Advanced Micro Devices Inc. (AMD; B/Watch Neg/--) will remain on CreditWatch with negative implications, where they had been placed on April 8, 2008. This news follows the announcement that the company will contribute its manufacturing facilities to a joint venture that will be 55% owned by Advanced Technology Investment Co. (ATIC; not rated) of Abu Dhabi.

As part of the transaction, AMD will receive an aggregate of $1 billion for equity in the joint venture and the sale of new equity at AMD. AMD will retain a 45% interest in the joint venture. The transactions are dependent on shareholder and regulatory approvals, including review by the Committee for Foreign Investments in the United States, and the transfer of previously confirmed incentives from the State of New York. Standard & Poor's expects to resolve the CreditWatch when the transaction is executed.

The joint venture, initially known as The Foundry Co., will assume approximately $1.2 billion of AMD debt and benefits from a commitment from ATIC to contribute a minimum of $3.6 billion to fund the expansion of the existing Dresden facility and the currently planned major factory in Saratoga County, New York. The capital commitment alleviates AMD's current cash flow pressures to expand capacity for the near to midterm. S&P considers AMD and Foundry to be consolidated for analytical purposes, despite the less-than-50% ownership, given the mutual dependence of the parties. Over time this view may be revised if third-party sales materially reduce the JV's reliance on AMD, or if AMD's ownership stake in the JV drops substantially.

Standard & Poor's will continue to monitor the transaction's progress over the next few months. If the contemplated transaction is executed as planned, it is likely the current corporate credit rating will be affirmed. S&P will need additional information to assess whether any of the recovery ratings will be affected. If the transaction encounters resistance from regulatory authorities or shareholders, or is modified in a way that diminishes its credit-enhancing features, S&P will review the changes or alternative strategy and the corporate credit rating could be lowered.

AEP INDUSTRIES: S&P Cuts Rating to B from B+ and Keeps Neg. Watch-----------------------------------------------------------------Standard & Poor's Ratings Services lowered its ratings on AEP Industries Inc., including its corporate credit rating to 'B' from 'B+'. All ratings remain on CreditWatch with negative implications, where S&P placed on Aug. 14, 2008, following the company's announcement that it entered into an agreement with Atlantis Plastics Inc. to acquire certain assets related to Atlantis' films business for a purchase price of $87 million subject to adjustments. The acquisition was dependent on a bidding process, following Atlantis' filing for Chapter 11 bankruptcy proceedings.

As of July 3, 2008, AEP had about $189 million in total debt, adjusted for capitalized operating leases, and tax-adjusted underfunded pension liabilities.

The downgrade follows AEP's recent announcement that the bankruptcy court has approved the company's acquisition of the Atlantis assets. The transaction is expected to close on Oct. 30, 2008.

AEP plans to draw down on its revolving credit facility and use cash on hand to fund the acquisition.

"The mainly debt-funded acquisition will weaken credit metrics and constrain liquidity at a time when the operating environment is challenging and AEP's operating performance has weakened," said Standard & Poor's credit analyst Paul Kurias.

Sharply higher resin prices and increased competitive pressures have reduced earnings in the second and third quarters of fiscal 2008, with adjusted EBITDA declining to negative $1 million in the third quarter ended July 30, 2008, from $12 million for the first quarter. AEP's free cash flow, after accounting for working capital changes, has declined meaningfully in 2008 relative to the previous year. The company's rolling 12-month free cash flow to total debt ratio declined in fiscal 2008 to single digit percentage levels before turning negative, from above 20% through fiscal 2007. The ratio of funds from operations to total debt declined to about 10% at July 30, 2008, from above 30% a year ago.

The CreditWatch reflects S&P's concerns that liquidity will be constrained in the near-term, in the absence of additional sources of funding for the acquisition. S&P's concerns center on a decline in currently comfortable availability under the company's existing asset-backed revolving credit facility, and a decline in the cushion available under the minimum EBITDA covenant. S&P expects availability under the ABL to decline to slightly above $40 million, pro forma for the acquisition at July 31, 2008, from $123 million. This decline in availability comes at a time when free cash flow generation is weak, reducing overall liquidity.

The lower availability will also reduce the cushion under the financial covenant that requires a minimum EBITDA of $30 million if excess availability is below $20 million.

S&P will resolve the CreditWatch listing when the transaction closes and it get a clearer view of AEP's post-acquisition liquidity position, fourth-quarter performance, and earnings prospects for the acquired assets. S&P could lower ratings by one notch, including the corporate credit rating to 'B-', if the company does not take steps to bolster its liquidity in the next few weeks, or if fourth-quarter free cash flow does not improve ABL availability and the cushion relative to the $20 million threshold level that triggers the minimum EBITDA covenant.

S&P could also lower ratings if fourth quarter fiscal 2008 financial performance does not at least preserve current covenant EBITDA levels. If the company improves liquidity on a sustainable basis, its free cash flow to debt ratio improves, and it maintains its covenant cushion, S&P could affirm the ratings.

ALION SCIENCE: Credit Amendment Result Cues S&P's Stable Outlook----------------------------------------------------------------Standard & Poor's Ratings Services revised its outlook on McLean, Virginia-based Alion Science and Technology Corp. to stable from developing as a result of amendments to its credit agreement that provide additional cushion to its still somewhat tight near-term covenant requirements until Sept. 30, 2009. At the same time, Standard & Poor's affirmed its ratings on the company, including the 'B-' corporate credit rating.

"The reason for the revision to stable is that the amendments to the credit agreement alleviate pressure for Alion to significantly reduce debt or to grow its adjusted EBITDA base, or a combination of both, to meet its step-down in maintenance leverage covenant on Dec. 31, 2008," said Standard & Poor's credit analyst David Tsui. "The amendment raises the cost of borrowing by 350 basis points and increases the percentage of annual excess cash flow that the company must use to prepay outstanding term loans from 50% to 100%."

In September 2008, the company also amended its $55 million seller note to extend the maturity date to a single balloon payment on Aug. 6, 2013, from equal installments of approximately $27 million in December 2009 and December 2010, and reduced the cash pay interest from 16% annually beginning December 2008 to 6% cash interest payable quarterly and a 10% PIK compounding quarterly.

"The ratings reflect Alion's second-tier position in the highly competitive and consolidating government IT services market, very high debt leverage, and a still tight near-term cushion within its bank loan covenants," Mr. Tsui added. "A predictable revenue stream based on a strong backlog and the expectation that the government IT services sector will continue to grow over the intermediate term are partial offsets to these factors."

Alion is an employee-owned technology solutions company delivering technical expertise and operational support to the Department of Defense, civilian government agencies, and commercial organizations. Alion had approximately $551 million in total funded debt, excluding interest payable and lease obligations of $13 million and $6 million, respectively, as of June 30, 2008.

Alion faces competition from many larger defense contractors and government IT service providers with greater financial resources and broader technical capabilities as the company bids for new contracts and re-competes for existing contracts. Alion's ability to maintain its historically strong re-compete success rate (at more than 90%) will be a key to success. A strong backlog of about $4.5 billion, about $335 million of which is funded, offers a predictable source of revenue over the intermediate term.

Alion's EBITDAE margins are expected to remain stable at 8% over the intermediate term. Because Alion's ownership is structured in the form of an ESOP, retirement plan contributions made in stock (E) are added back to calculate the company's base cash flow, EBITDAE. Operating lease adjusted total debt-to-EBITDAE was about 8.4x, down slightly from 8.6x on March 31, 2008, but is still high for the rating.

Cash flow from operations for the 12 months ended June 30, 2008, was $23 million, an improvement from the $63 million used in a year ago period, primarily due to an improved days sales outstanding to 103 days as of June 30, 2008. S&P expects some further improvement in DSO from 100 days as of July 31, 2008. As of June 30, 2008, Alion had $11 million outstanding from its $50 million revolver credit facility.

As of June 30, 2008, Alion had minimal cash on hand and $36 million of borrowing capacity under its revolving credit facility. A low fixed-cost structure, minimal capital expenditures, and an improving DSO are expected to allow Alion to generate modest levels of free operating cash flow, an improvement from negative free cash flow in the past two years.

The amendment to the credit agreement includes maintenance leverage covenants of 4.1x until Dec. 31, 2008, an increase from 3.25x. Step-ups beginning March 31, 2009 to 4.25x offer additional cushion to leverage covenants.

Alion's $292 million senior secured bank facility is rated 'B+', with a recovery rating of '1', indicating expectation for very high recovery in the event of a payment default. The $250 million senior unsecured notes are rated 'CCC', with a recovery rating of '6', indicating the expectation for negligible recovery in the event of a payment default.

The stable outlook reflects additional cushion provided by the amended covenants, combined with the company's large contract backlog and stable profitability measures. S&P could revise the outlook to positive if the company continues to improve its DSO and uses its improved cash collected for debt repayment, leading to a sustained operating-lease adjusted leverage of less than 8x, and increased comfort with the covenant cushions. On the other hand, S&P could change the outlook to negative if the company has less success in winning new business or re-compete to replenish finished contracts, leading to a decline in EBITDA and increased covenant concerns, or if liquidity tightens again because of working capital growth.

ALITALIA SPA: Lufthansa May Get Minority Stake in Airline---------------------------------------------------------Reuters reports that German and Italian leaders backed a potential agreement on Monday between Alitalia SpA and Lufthansa on the German airline taking a minority stake in the Italian carrier.

"We have said that we are open to international alliances and it would please us greatly if this alliance was with a country that we have worked with a lot, namely Germany," Italian Prime Minister Silvio Berlusconi was cited by Reuters News as saying during a joint news conference with German Chancellor Angela Merkel in Berlin. "For Italy this would be welcome and it's of course up to the two parties, Alitalia and Lufthansa, to decide if it would be convenient for both," he added.

Reuters relates that Ms. Merkel said Germany would also welcome the deal but added it was up to Lufthansa to decide.

According to the report, Compagnia Aerea Italiana s.r.l., a consortium of Italian investors created to save the national carrier, said it will choose a foreign partner for the airline in the coming weeks. Lufthansa and Air France-KLM are the likely contenders, Reuters says.

Marketing of Alitalia

As reported in the Troubled Company Reporter-Europe on Sept. 30, 2008, various sources said CAI is considering selling a minority stake to either Air France-KLM or Lufthansa and launching the new Alitalia by November 1.

CAI revived its bid for Alitalia after it reached agreement with all the nine Alitalia unions. CAI's rescue plan calls for renaming of Alitalia and writing off between EUR1.2 billion and EUR2 billion worth of its debt.

On Sept. 22, 2008, the TCR-Europe reported that CAI withdrew its bid to buy Alitalia's healthier assets after failing to win the support of labor unions. After CAI's withdrawal, Alitalia proceeded with its fourth public request for offers to buy any or all parts of the company's assets until Sept. 30, 2008. Thecarrier published notices in the Italian newspapers Corriere della Sera, il Sole-24 Ore and la Repubblica, as well as the London-based Financial Times, according to The Associated Press.

In the prepared notice cited by The AP, Alitalia sought "whoever might be able to guarantee the continuity, in the medium term, of the transportation service . . . to submit its expression of interest."

As reported in the TCR-Europe on Oct. 2, 2008, Alitalia Extraordinary Commissioner Augusto Fantozzi said he received several expressions of interest for Alitalia within the terms of the deadline on Sept. 30, 2008. However, only CAI's proposal is directly concerned with the overall activities of air transport. Other expressions of interest meanwhile concerned specific branches or activities of the various companies making up the Alitalia Group.

Intesa Sanpaolo, Alitalia's financial advisor for the procedure, has started analyzing the expressions of interest received. Upon completion of the analysis, the proposers who meet the conditions for initiating negotiations will undergo due diligence examination.

Mr. Fantozzi had not named the entities who were submitting expressions of interest.

A report posted at World Aeronautical Press Agency's site meanwhile said Alitalia's Mr. Fantozzi expected to receive a binding offer from CAI from October 13 to 15 and the signature of the agreement on assets sale "In bonis" of the carrier by October 20. About slots it is Assoclearance which should probably decide, the report added.

Unions Seek Urgent Meeting

Separately, Unions, worried about Alitalia's current situation, asked Commissioner Fantozzi of calling an urgent meeting in order to "Allow a confrontation on the current management phase of the carriers' activities", a report posted October 7 at World Aeronautical Press Agency says.

According to the report, Filt Cgil generel secretary Mario Rossi said that at the moment, the major fear is that "some company's segments" could not survive until the "new management phase".

Ryanair Balks at State Bailout

A TCR-Europe report on Oct. 6, 2008, said low fare airline Ryanair submitted a formal complaint to the EU Commission regarding the latest bailout of Alitalia. Ryanair said it has previously submitted several complaints against Alitalia and other flag carrier airlines, including Olympic, Air France and Lufthansa, against which the EU Commission has taken no action. Ryanair highlighted that this ongoing unlawful protection of flag carriers by their member state governments, which amounts to billions of euro, increasingly makes a mockery of the EU Commission's enforcement of the state aid rules.

The EU Commission meanwhile said the complaint from Ryanair will be addressed in the same meticulous way as any other it receives, The Associated Press reported.

About Alitalia

Based in Rome, Alitalia S.p.A. -- http://www.alitalia.it/-- provides air travel services for passengers and air transport ofcargo on national, international and inter-continental routes,including United States, Canada, Japan and Argentina. TheItalian government owns 49.9% of Alitalia.

Despite a EUR1.4 billion state-backed restructuring in 1997,Alitalia posted net losses of EUR256 million and EUR907 millionin 2000 and 2001 respectively. Alitalia posted EUR93 million innet profits in 2002 after a EUR1.4 billion capital injection.The carrier booked annual net losses of EUR520 million in 2003,EUR813 million in 2004, EUR168 million in 2005, EUR625.6 millionin 2006, and EUR494.64 million in 2007.

AMERICAN INT'L: S&P Lifts ILFC Preferred Stock Rtng to BBB from B-----------------------------------------------------------------Standard & Poor's Ratings Services raised its ratings on preferred stock of International Lease Finance Corp. (ILFC; A-/Watch Dev/A-1) to 'BBB' from 'B', and revised the CreditWatch implications to developing from negative. All other ILFC ratings remain on CreditWatch with developing implications.

S&P had lowered its ratings on preferred stock of ILFC and of certain other units of ultimate parent American International Group Inc. (A-/Watch Neg/A-1) because of the U.S. Federal Reserve's Sept. 16, 2008, statement that the U.S. government would have the right to veto AIG's common and preferred dividends under the $85 billion credit line extended by the Federal Reserve Bank of New York to AIG. However, S&P now believes that it is unlikely that ILFC's preferred dividends would in fact be vetoed, though AIG has suspended its own common dividend. S&P believes that, to facilitate the planned sale of ILFC and realize maximum proceeds, AIG and the U.S. government would not find it in their interests to intervene to block preferred dividends that ILFC could otherwise pay from its own resources.

S&P's 'BBB' rating on the preferred stock, two notches below the 'A-' long-term corporate credit rating on ILFC, is consistent with a normal rating differential for investment-grade companies.

"Our 'A-' long-term corporate credit rating on ILFC reflects our current view of the company's credit quality, without consideration of any support from AIG," said Standard & Poor's credit analyst Philip Baggaley. "Our 'A-1' short-term corporate credit rating, by contrast, also factors in liquidity available indirectly from the federal credit line to AIG." S&P normally assigns an 'A-2' short-term rating to companies whose long-term corporate credit rating is 'A-'.

S&P reviews of the AIG credit line documentation and other information confirms that the assets of ILFC are not subject to a lien under the $85 billion AIG credit line, creating a claim senior to those of unsecured bondholders of ILFC. ILFC drew down its $6.5 billion of bank credit lines, and stated on Sept. 18, 2008, that it expected that those funds, "together with cash provided by operating activities will be sufficient to meet its debt obligations into the first quarter of 2009." S&P expects that ILFC will in fact have access to liquidity that will permit it to meet external obligations without recourse to the credit markets beyond that timeframe. ILFC's aircraft leasing business, which generated record profits in the second quarter of 2008, continues to perform well, although S&P expects that aircraft lease rates will weaken as the unfolding global economic slowdown and financial market turmoil hurts air travel and aircraft values.

Ratings are on CreditWatch with developing implications. When ILFC is sold, S&P will reevaluate the company's credit, including consideration of its new ownership, capitalization, and access to liquidity, to resolve the CreditWatch review.

In addition, S&P will take into account the outlook for aircraft leasing and the state of capital markets.

AMERICAN HOME: Files Amended Chapter 11 Plan of Liquidation-----------------------------------------------------------American Home Mortgage Investment Corp. delivered to the U.S.Bankruptcy Court for the District of Delaware on September 30,2008, an amended Chapter 11 plan of liquidation and disclosure statement. Subsequently, on October 8, 2008, the Debtors modified the Amended Plan, to reflect certain non-material changes.

The Amended Plan changes the treatment of certain claims, and changes the Debtors' stipulated asset allocation with respect to each Debtor's contribution to a Plan trust.

The Debtors believe that pursuing a de-consolidated plan is more prudent. They explain that they assessed common factors in favor of, and against substantive consolidation, including determination whether (i) overhead was shared between entities, (ii) there were intercompany guarantees on loans, (iii) financial statements were separate or consolidated, and (iv) directors of subsidiaries took direction from the parent company.

The Debtors reveal that as of September 15, 2008, at least 10,149 proofs of claim asserting liquidated claims aggregating at least $15,510,000,000 were filed against them, including $3,346,533,621 asserted against AHM Corp. They also disclose that AH Mortgage Acquisition Co., Inc., purchaser of their loan servicing business, has amended its claim for alleged breach of the Asset Purchase Agreement and currently seeks for payment of $17,238,989. The Debtors objected to the Claim.

Treatment of Claims

Under the terms of the Amended Plan, JPMorgan Chase Bank, N.A.'s secured claim against American Home Mortgage Acceptance, Inc., and American Home Mortgage Corp. is re-classified as JPMorgan's secured claim against American Home Mortgage Investment, Inc., and AHM Corp. under Class 5B(4) and the newly-assigned Class of 2B(3). Classes 1C(1) and 2C(1) are re-defined as unsecured claims, other than the BofA Syndicate Unsecured Claim and Subordinated Trust Preferred Claims, against American Home Mortgage Holdings, Inc.

The Subordinated Trust Preferred Claims against AHM Holdings and AHM Investment are changed to Classes 1C(3) and 2C(3), in which recovery estimates are based on assumption that distributions made on account of Subordinated Trust Preferred Claims will be paid over to Holders of Senior Unsecured Claims pursuant to the Senior Unsecured Claims Procedure. Classes 1C(3) and 2C(3) will be paid a Pro Rata share of Net Distributable Assets of AHM Holdings and AHM Investment estates, subject to the same procedure.

The Amended Plan also provides more details regarding the Subordinated Trust Preferred Claims, including benefits of subordination to any holder of a claim under certain classes. Moreover, the Amended Plan creates Senior Unsecured Claims Reserves, wherein any distributions that would otherwise be made on account of Allowed Subordinated Trust Preferred Claims against AHM Holdings or AHM Investment will be deposited by the Plan Trustee.

Classes 1B(1), 2B(1)(a), 3B(1)(a), 4B(1)(a), 5B(1)(a), 6B(1), 7B(1) and 8B(1), which may be impaired, comprise all allowed miscellaneous secured claims against a particular Debtor. The Claims are secured by liens on the Debtors' miscellaneous assets, including cash, and may include tax claims secured by liens in REO.

To the extent there is sufficient value in the assets securing any Allowed Miscellaneous Secured Claim, the Amended Plan provides that the claim will include (i) the non-default rate of interest under the agreement, upon which the claim arises, (ii) federal judgment rate of interest, and (iii) any reasonable fees, costs, or charges payable under the agreement.

Holders of Allowed Claims in Classes 1D, 1E, 2D, 2E, 3D, 3E, 4D, 4E, 5D, 5E, 6D, 6E, 7D, 7E, 8D and 8E are impaired, but are not entitled to vote on the Plan. They are deemed to reject the Plan.

Holders of Allowed Claims in Classes 1A, 2A, 3A, 3B(3), 4A, 4B(3), 5A, 5B(5), 6A, 7A and 8A, which are not impaired, are deemed to accept the Plan and, therefore, are not entitled to vote on the Plan.

Settlement of Intercompany Claims

As part of the Amended Plan's comprehensive settlement of potential inter-estate disputes, the financial advisors to the Debtors and the Official Committee of Unsecured Creditors agreed that these adjustments should be made to prepetition intercompany balances, to more accurately reflect prepetition business activity and related balances among the Debtors:

(a) An adjustment for the unallocated overhead expenses will reflect the allocation for the departments of human resources, information technology, policies and procedures, accounting, finance, legal facilities, executive and miscellaneous corporate costs incurred by AHM Corp. in the prepetition period that were not previously allocated to the other Debtor entities. The costs have been allocated to each of the Debtors based on the gross dollar activity reflected on each Debtors' income statements in the relative periods for which there was no previous allocation. AHM Holdings' income statements have been modified to include activity relating to AH Bank, a wholly owned subsidiary of AHM Holdings; and

(b) An $8,200,000 payable to Homegate Settlement Services, Inc., from AHM Corp. arises solely from the intercompany business Homegate conducted with AHM Corp., and the related intercompany transfer pricing. Because it is not defensible that a business like Homegate would be designed to operate at a loss, the financial advisors of the Debtors and Creditors Committee have agreed to adjust the intercompany balances to reflect break-even pricing for the Homegate Entity operations.

Stipulated Asset Allocation

The majority of inter-estate conflicts sought to be resolved via the Stipulated Asset Allocation are relevant in determining the residual asset value that will be contributed by each Debtor's bankruptcy estate, to the Plan Trust. Hence, for purposes of the settlement, each estate's total contributed asset values were determined by looking at both value realized from the disposition of assets plus an estimated value relating to assets yet to be liquidated.

The Amended Plan also provides for certain steps in the methodology underlying the Stipulated Asset Allocation. The Amendment allocates an additional contingency reserve totaling $11,000,000, which is established to account for potential additional administrative or priority costs claimed against the estates.

After accounting for the allocations, the resulting Asset values represent the residual value of non-litigation assets contributed to the Plan Trust by each estate. The residual non-litigation asset value of each estate as a proportion of the total non-litigation asset value of all estates makes up the Stipulated Asset Allocation:

The Debtors selected July 31, 2008, also known as the determination date, as the date from which to measure mortgage loans' delinquency status, to determine the likelihood of suffering a loss as a result of the Debtors' failure to repurchase loans, and the presumed amount of any of those losses.

To arrive at reasonable estimates of loss frequency and loss severity based on delinquency status as of the Determination Date, the Debtors analyzed the actual historical losses they suffered when liquidating non-performing loans between January 1, 2006 and January 31, 2008. The Debtors note that the analysis was completed on a product-by-product basis because different types of mortgages can be expected to have different loss frequencies and loss severities.

Based on the Debtors' assumptions as to loss frequencies and loss severities based on loan product type and delinquency buckets, valid early payment default claims that were unliquidated as of the Determination Date will be liquidated and allowed in an amount equal to the unpaid principal balance of the underlying loans as of the Determination Date, multiplied by these applicable percentage:

Each of the applicable percentages is the product of the (i) applicable loss frequency based on the delinquency bucket, and (i) the applicable loss severity based on the loan product type and delinquency bucket.

Vesting of Assets

On the Plan's effective date, legal ownership of all BofA Mortgage Loans owned by the Debtors immediately prior to the Effective Date will vest in, and constitute assets of one ormore of these entities, which entities will own the Bank of America, N.A. Mortgage Loans subject to the terms of the BofA Global Settlement Stipulation:

* AHM Acceptance; * AHM Corp.; * any other Debtor entity; * the Plan Trust; * BofA as administrative agent; or * other entities as may be agreed upon by the Debtors and BofA.

The Debtors and BofA will execute and file as a supplemental plan document, a stipulation specifying (i) the entities, in which the BofA Mortgage Loans will vest, and (ii) providing a mechanism for payment of anticipated costs of ownership of the BofA Mortgage Loans that will be borne by BofA.

Cancellation of Notes and Instruments

As soon as practicable after the Effective Date, the Plan Trustee will file with the United States Securities and Exchange Commission, a SEC Form 15 on behalf of AHM Investment, terminating its duty to file reports pursuant to SEC Rule 12g-4(a)(1).

Notwithstanding anything contained in the Plan or the Disclosure Statement, the Subordinated Trust Preferred Indentures will continue in effect solely for the purposes of permitting an Indenture Trustee to (i) maintain or assert any right pursuant to the terms of the Plan, (ii) maintain and enforce any right to indemnification, contribution or other Claim it may have under the applicable Subordinated Trust Preferred Indentures, and (iii) exercise its rights and obligations relating to the interests of the Holders of Subordinated Trust Preferred Claims.

Non-Material Modifications

The non-material modifications to the Amended Plan submitted by the Debtors to the Court on October 8, include a definition of the term "Breach Determination Date" which means, with respect to a given pool of loans, (a) the date the loans were purchased from the Debtors or (b) for loans purchased from a non-Debtor entity, the date the claimant obtained rights to enforce the Debtors' sale representations and warranties with respect to such pool of loans.

Moreover, a definition of "EDP Determination Date" was included, to mean July 31, 2008.

A reservation of rights was also incorporated in the Amended Plan, which states that to the extent any EPD Claims or Breach of Warranty Claims are asserted by multiple parties with respect to the same loan or pool of loans, nothing in the EPD/Breach Claims Protocol will prejudice the Plan Trustee's right to object to the claims as duplicative, or to seek judicial determination of the parties' standing to assert the claims under the governing documents and applicable law.

LaSalle Bank National Association, as trustee for certain beneficial security holders of various trusts, asks the Court to deny approval of the Debtors' amended disclosure statement.

LaSalle Bank contends that the Amended Disclosure Statement fails to provide it and other similarly situated creditors with adequate information so that they can make an informed vote for or against the Amended Chapter 11 Plan of Liquidation of the Debtors.

Regina A. Iorii, Esq., at Werb & Sullivan, in Wilmington, Delaware, relates that the Amended Disclosure Statement says LaSalle is projected to receive approximately 1.06% of its claim against American Home Mortgage Corporation, and 0.11% of its claim against American Home Mortgage Servicing, Inc. She complains, however, that the Amended Disclosure Statement fails to provide, among other things, valuation methods, calculations, rationale or financial data the Debtors used in determining LaSalle Bank's estimated recovery percentages.

Ms. Iorii asserts that the Amended Disclosure Statement's substantive consolidation discussion is lacking in financial data that would allow LaSalle Bank to determine how a potential substantive consolidation might affect its claims. Instead, the Debtors propose a stipulated asset allocation whereby they assign a certain percentage of assets to each bankrupt entity, she says. The Stipulated Asset Allocation does not explain why AHM Corp. bears 54.12% of all administrative costs, Ms. Iorii points out.

Otherentities objected to the Debtors' initial disclosure statement.

a. Wells Fargo Funding, Inc.

Wells Fargo Funding, Inc. informs the Court that it received a letter from the Debtors saying that under their proposed EPD and Breach Tabulation Rules, it is required to respond to a preliminary informational questionnaire by September 30, 2008, as holder of EPD and Breach claims against the Debtors.

Karen C. Bifferato, Esq., at Connolly Bove Lodge & Hutz LLP, in Wilmington, Delaware, maintains that the Debtors can not require Wells Fargo to comply because the Court has not approved their proposed EPD and Breach Tabulation Rule.

b. Waterfield and Union Federal

Waterfield Shareholder LLC and Union Federal Bank of Indianapolis say the Initial Disclosure Statement fails to provide adequate information that would enable an investor or creditor to make an informed judgment about the Plan.

Eric M. Davis, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Wilmington, Delaware, tells the Court that the Debtors' description of a Waterfield litigation is inaccurate and misleading because it provides only vague descriptions of claims asserted by parties in the litigation.

c. Edward D. Ekas

In a letter to the Court, Edward D. Ekas signified his objection to the Initial Disclosure Statement by attaching an invoice of his purchase of the Debtors' stock, for $35,000.

About American Home

Based in Melville, New York, American Home Mortgage InvestmentCorp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investingin mortgage-backed securities and mortgage loans resulting fromthe securitization of residential mortgage loans originated andserviced by its subsidiaries.

The rating actions were taken as part of Fitch's ongoing surveillance process of existing transactions.

ATHILON CAPITAL: Fitch Cuts $200MM Notes Ratings to 'BB' from 'AA'------------------------------------------------------------------Fitch has removed from Rating Watch Negative and downgraded Athilon Capital Corp. and Athilon Asset Acceptance Corp. as well as seven classes of notes. In addition, a Negative Rating Outlook has been assigned to Athilon's Issuer Default Ratings. These actions are effective immediately:

Athilon is a credit derivative products company which sells protection primarily on tranches of corporate collateralized debt obligations to various counterparties.

The actions are the result of exposure to two structured finance CDOs for which Athilon sold protection to counterparties. These transactions have experienced significant negative ratings migration in their underlying collateral assets. The Negative Outlook on the IDRs reflects the continued potential for future negative ratings migration in the SF CDOs to which Athilon is exposed, and challenges these pose to Athilon's capitalization and business model.

The smaller of the two SF CDO transactions, which is rated by Fitch, has experienced meaningful negative rating migration, with the rating of the most senior tranche downgraded to 'CCC' from 'AAA'. The second transaction, which is not rated by Fitch, has also experienced recent negative ratings migration in its underlying assets. Fitch's expectations for losses in the underlying portfolios of the CDOs, indicates a material probability of impairment of the classes of notes for which Athilon sold protection. In its analysis, Fitch took into account that credit events may only be called beginning in 2014, which may delay the payments for any realized losses on the underlying SF CDO positions.

ATLANTIC LAND: Files for Chapter 11 in West Palm Beach------------------------------------------------------Atlantic Land Co. filed for Chapter 11 bankruptcy before the U.S. Bankruptcy Court for the Southern District of Florida, the South Florida Business Journal reported Tuesday. The report notes that the company received a foreclosure notice from First Bank Florida in January on the company's downton office building at 131 N.E. First Ave. The property is mortgaged to First Bank Florida for $630,000. The property is valued at $850,000, according to Palm Beach County property records, the report says.

According to the South Florida Business Journal, Atlantic Land's other creditors are:

-- the city of Boca Raton, -- land developer Greg Talbott, -- 140 N. Federal of Boca, which holds a $200,000 mortgage on the property, and -- the Robert Roschman Revocable Trust of Fort Lauderdale

Based in Boca Raton, Florida, The Atlantic Land Company owns an office building in Boca Raton, Florida. The Debtor filed for Chapter 11 relief on Oct. 6, 2008 (Bankr. S.D. Fla. Case No. 08-24712). Susan D. Lasky, Esq., represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed $500,000 to $1 million in assets as well as debts.

BARRINGTON BROADCASTING: S&P Trims Corp. Credit Rating to 'CCC+'----------------------------------------------------------------Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on Hoffman Estates, Illinois-based Barrington Broadcasting LLC. The corporate credit rating was lowered to 'CCC+' from 'B-'. At the same time, S&P lowered the issue-level rating on Barrington's senior secured credit facilities to 'B-' from 'B+', and revised the recovery rating on this debt to '2', indicating S&P's expectation of substantial recovery in the event of a payment default, from '1'.

In addition, the issue-level rating on the company's subordinated debt was lowered to 'CCC-' from 'CCC'. The recovery rating on this debt remains at '6', indicating S&P's expectation of negligible recovery in the event of a payment default. The corporate credit and issue-level ratings remain on CreditWatch with negative implications, where they were placed June 13, 2008.

"The downgrade and continued CreditWatch listing reflect the difficulty that we believe the company faces to reduce debt and increase EBITDA sufficiently to meet its Dec. 31, 2008 leverage covenant step-down, particularly in light of the McCain campaign's decision to halt its political advertising in Michigan," explained Standard & Poor's credit analyst Jeanne Mathewson. "Barrington has a significant geographic concentration of its TV station portfolio in that state.

In addition, S&P is concerned that continuing tight credit markets have reduced the probability that Barrington will be able to obtain bank covenant relief, if needed, to amend its credit facility in the face of tightening leverage covenants at the end of the year. Two-year average EBITDA, which smoothes the effects of political advertising and Olympics cycles, is used in the covenants' EBITDA definition. This computation becomes a handicap if the company experiences successive weak quarters."

Revenue in the quarter ended June 30, 2008 was up 1.5%, while EBITDA was down 4.4% in the same period, mainly because of an increase in expenses related to the acquisition of the WGTU and WGTQ stations. The company was in with all covenants as of June 30, 2008, with just under 0.4x of cushion against the leverage requirement--the tightest of its covenants. The leverage covenant will step down an additional 1.25x at the end of this year, and the company will need to increase EBITDA and meaningfully reduce debt to maintain compliance, which S&P views as a lower probability now. S&P notes that the credit agreement contains equity cure provisions that can be invoked in three out of four consecutive fiscal quarters; however, there is no assurance that sponsors will inject capital in this circumstance.

S&P makes no assumption regarding sponsors' willingness to provoke these provisions in its analysis.

In resolving the CreditWatch listing, Standard & Poor's will continue to monitor Barrington's operating trends and prospects for reducing debt to two-year average EBITDA, or amending its credit facility covenants. Assuming the company is able to pay down roughly $10 million in debt using cash on hand and political revenue, EBITDA in the second half of 2008 would need to increase by roughly 23% over the same period in 2006, or 33% over 2007, to achieve this leverage target. S&P views this scenario as extremely challenging given prevailing economic conditions.

Even if its banks approve a waiver or amendment to the credit agreement--a prospect S&P views as increasingly unlikely--the company will have difficulty absorbing a potential increase in its borrowing margin.

At the same time, Standard & Poor's lowered its issue-level rating on Baseline's 12.5% senior secured notes due 2012 to 'D' from 'CCC+'. The recovery rating on the notes remains a '3', indicating meaningful recovery in the event of a payment default, pending further information.

The rating actions stem from Baseline's failure to make the Oct. 1, 2008, required interest payment of $7.187 million on its senior secured notes. The notes provide for a 30-day grace period, which began Oct. 1, 2008.

Baseline was unsuccessful in negotiating a new bank facility to redeem outstanding notes. Closing was expected on October 6.

"While we deem the company had the ability to meet its interest payment from cash balances, management elected not to do so," said Standard & Poor's credit analyst Amy Eddy. "Our rating actions reflect the high probability that the company will pursue strategic alternatives including possible restructuring of its debt obligations."

BAUGHER CHEVROLET: Sale of Dealership to Charlie Obaugh Approved----------------------------------------------------------------The U.S. Bankruptcy Court for the Western District of Virginia approved Monday the sale of long time Waynesboro car dealership Baugher Chevrolet-Buick to Obaugh Chevrolet-Buick, owned by Staunton auto dealer Charlie Obaugh, NewsVirginian.com's Bob Stuart reports.

According to Mr. Stuart, Chip Magee, Esq., the Roanoke attorney for the Baugher family, said the new dealership on West Main Street could open later this week under a new name. Mr. Stuart also relates that Mr. Magee said the original sale price of $3.3 million was adjusted by $385,000 because of vehicles sold by Baugher since the agreement was made with Mr. Obaugh, who owns multiple car dealerships in the area.

-- mounting pressure of foreclosure from BB&T Bank, its major creditor. BB&T had secured the more than $3 million debt it was owed with liens against both Baugher's assets and dealership real estate; and

-- General Motor's notice this summer to terminate the parties' franchise agreement because Baugher Chevrolet-Buick no longer had a floor plan to purchase new vehicles.

"The gas prices went up and we had a large truck inventory and no cars to sell," Sandra Baugher, vice president of the dealership, told Judge Ross Krumm at a hearing, according to the report.

The report says the sale proceeds will be used to satisfy the debt owed to BB&T. Mr. Magee said about $450,000 is still owed to unsecured creditors. The report relates that Mr. Magee told Judge Krumm that there is about $306,000 in judgments, promissory notes, GM stock, parts and insurance refunds and other money that can be applied to the unsecured debt owed creditors.

Judge Krumm said he was approving the sale because "it was the best possible arrangement" Baugher could make as it faced foreclosure and loss of its GM dealership agreement, the report adds.

Headquartered in Waynesboro, Virginia, Baugher Chevrolet Buick,Inc. -- http://www.baugherautos.com/-- sells new and used cars, trucks and SUVs. The company filed for Chapter 11 protection onAug. 22, 2008 (Bankr. W.D. Va. Case No.08-50862). A. CarterMagee, Jr., Esq., at Magee Foster Goldstein & Sayers, representsthe Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of$2,931,782 and total debts of $4,432,601.

BEAR STEARNS: Fitch Trims Class D Certs. Rating to 'BB' from 'BBB'------------------------------------------------------------------Fitch Ratings has taken rating actions on Bear Stearns mortgage certificates. The classes represent a beneficial ownership interest in separate trust funds, which include bonds that have been affirmed and downgraded.

The affirmations are the result of stable performance since issuance in September 2007. As of the September 2008 distribution date, the pool's certificate balance has decreased 0.3% to $3.25 billion from $3.26 billion at issuance. 170 loans (75.2%) are interest-only or partial interest-only. In addition, there are currently no specially serviced loans.

There are six shadow rated loans in the transaction (1.8%), each of which maintains their investment-grade shadow rating. The largest, North Los Altos Shopping Center (0.4%), is secured by a 127,404 square foot retail property in Long Beach, California. Servicer reported occupancy as of the June 2008 is 98.5% compared to 95% at issuance.

The largest loan in the pool (7.6%) is collateralized by 19 properties located in various states. As of March 2008, the servicer reported weighted-average occupancy was 92.3% compared to 94% at issuance.

The second largest loan (7.1%) is secured by a 1,268,480 sf office tower located in Houston, Texas. The first quarter 2008 servicer reported debt service coverage ratio is 1.28 times. One of the top five loans, 1101 New York Avenue (3.5%), had a year-end 2007 DSCR of 0.28x. However, the 2007 figures did not represent full-year leases for newly signed tenants and the office property's performance is expected to improve. Reported first quarter 2008 DSCR was 0.93x and occupancy was at 97.4%.

Bible Believers Ministries, Inc. did not file a list of its largest unsecured creditors.

BILL HEARD: Wants Asset Sale Bidding Procedures Approved--------------------------------------------------------Bill Heard Enterprises Inc. and its debtor-affiliates ask theUnited States Bankruptcy Court for the Northern District ofAlabama to approve proposed bidding procedures for the sale ofcertain real property together with other business assets.

The Debtors' proposed stalking-horse bidder is subject to GeneralMotors' approval.

Bidders are required to submit their offer together with a cashdeposit of, either (a) $500,000 if the offer property includes real estate; or (b) $250,000 if property excludes real estate.

The stalk-horse bidder will be paid up to $200,000 break-up feein the event the Debtor consummates the sale to another party.

An auction for the Debtors' asset will take place at the officesof Burr & Forman LLP at 420 North 20th Street, Suite 3400 inBirmingham, Alabama. During the auction, overbid by any party must surpass the stalking-horse bidder's proposed purchase price by the amount of the break-up fee plus $10,000.

The Debtors will file separate sale motions as offers for certain properties are received, and then schedule auction dates.

Headquartered in Huntsville, Alabama, Bill Heard Enterprises Inc.-- http://www.billheardhuntsville.com/-- is one of the largest dealers of Chevrolet in the United States. The company and 17 ofits affiliates filed for Chapter 11 protection on Sept. 28, 2008(Bankr. N.D. Ala. Lead Case No. 08-83028). Derek F. Meek, Esq.,at Burr & Forman, LLP, represents the Debtors in theirrestructuring efforts. When the Debtors filed for protection fromtheir creditors, they listed assets and debts of between$500 million and $1 billion each.

BOSCOV'S INC: Wants $16.5MM Cash Sale of Assets to Regio BDS OK'd-----------------------------------------------------------------Boscov's Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve the sale of substantially all of their assets, free and clear of liens and encumbrances, to Versa Capital Management Inc., through its newly created affiliate, Regio BDS, LLC, subject to competitive bidding at an auction to be held on Oct. 20, 2008.

Regio will pay about $16,500,000 cash for substantially all of the Debtors' assets and assume the Debtors' liabilities totaling more than $200,000,000. The deal, according to The Evening Sun and The Associated Press, is valued at $288,000,000.

In addition, the Debtors ask the Court to:

(a) authorize their assumption and assignment of certain executory contracts and unexpired leases in connection with the Sale;

(b) find that Versa or the successful bidder is a "good faith purchaser" as that term is defined in Section 363(m) of the Bankruptcy Code, and has not violated Section 363(n);

(c) authorize the Debtors to change their names upon the closing of the sale and to modify the case caption used in their Chapter 11 cases based on those name changes;

(d) waive the 10-day stay requirement of Rules 6004(h) and 6006(d) of the Federal Rules of Bankruptcy Procedures; and

(e) grant the Purchaser liens in certain of its inventory upon the Sale Closing pursuant to Section 364(d).

The Court previously approved the Bidding Procedures governing the sale of substantially all of the Debtors' assets. The Debtors also filed a draft asset purchase agreement with Regio, a full-text copy of which is available for free at:

Brad Erens, Esq., at Jones Day, in New York, asserts that the purchase price offered by Regio BDS for the Debtors' assets is well in excess of the value of any asserted lien for all lienholders so that any lien can be satisfied under Section 365(f)(2) as part of the sale. Moreover, the service of the sale notice pursuant to the Bid Procedures Order will afford creditors with sufficient notice of the sale, a further justification for the Court to approve sale of the Debtors' assets to the Purchaser free and clear of lien, he contends.

The Regio APA, Mr. Erens relates, requires the assumption and assignment of certain executory contracts and unexpired leases, or alternatively, provides that the Purchaser will have the option to assume certain other executory contracts and unexpired leases by March 2, 2009, as an integral part of the Sale. It is thus an appropriate exercise of business judgment for the Debtors to agree to assume and assign the contracts according to the Agreement, he asserts.

By no later than Oct. 15, 2008, the Debtors will serve adequate assurance packages on all landlords to the Debtors' nonresidential real property leases, which packages will set forth the financial capability of the Purchaser and other potential bidders to adequately perform under the leases, among others. The notice provisions and the bifurcated objection deadline for counterparties to object to the assumption and assignment are adequate to protect the rights of counter-parties to the Debtors' contracts and leases, Mr. Erens further asserts.

A list of executory contracts and unexpired leases to be assumed and assigned, including the corresponding cure amounts proposed is available for free at http://ResearchArchives.com/t/s?3376

A copy of the notice of intent to assume and assign executory contracts and leases is available for free at:

The Debtors, asserting that the Purchaser not being an "insider" of the Debtors' businesses, and that the APA is being negotiated in good faith and from arm's length bargaining positions, maintain that the Purchaser is a good faith purchaser according to the terms of Section 363(m). The Debtors tell the Court that to their knowledge, no party has engaged in any conduct that would cause the APA to be avoided under Section 363(n).

The Debtors further relate that they have agreed to change their current names to allow the Purchaser to operate the business post-Closing under the "Boscov's" name without confusion with the Debtors' Chapter 11 cases. The Debtors will, at or prior to the Sale hearing, provide the proposed new names that will apply at Closing and the proposed new case caption for their cases.

As to their request for authority to grant the Purchaser first priority lien on all assets at the Store Closing Locations, the Debtors explain that this provision is a standard feature of most retail liquidation agreement.

Pursuant to the APA, the Purchaser, at its option, may designate certain stores as Store Closing Locations and liquidate the inventory at those stores in conjunction with a liquidation firm. During liquidation, the Debtors would retain title to the inventory to be sold and the Debtors' employees would continue to operate the Store Closing Locations. The Debtors then would remit to the Purchaser all proceeds from the Store Closing Sales at the conclusion of the Closing sales. As security that the Debtors would remit the proceeds to the Purchaser, the APA provides that the Debtors will grant the first priority lien on all assets at the Store Closing Locations.

Finally, Mr. Erens asserts that waiver of the 10-day stay requirement under Rules 6004(h) and 6006(d) is crucial to the Debtors' cases because the Debtors intend to consummate the Sale of their assets as soon as possible. Moreover, the Purchaser asked for the waiver when the parties negotiated the terms of the Sale Agreement, he tells the Court.

At the Debtors' behest, the Court will convene a hearing on Oct. 21, 2008, to consider approval of the Sale Motion. If no other timely bids are received before the Bid Deadline, the Court will consider approval of the sale of the Debtors' assets to Regio/Versa on October 22.

The Debtors served notices of the Sale Hearing on October 4. The Bidding Procedures Order required that Sale Hearing Notices must be served within one day after entry of the Bidding Procedures Order. Objections to the proposed sale and scheduled cure amounts must be filed by October 17, and objections to the adequate assurance of future performance must be filed byOctober 20.

Debtors Served Deposition Notice to HSBC

Mr. Erens informs the Court that he has delivered copies of the Debtors' request for HSBC Bank of Nevada, N.A., to produce certain documents. Mr. Erens adds that he also delivered to HSBC the Debtors' first set of interrogatories and a notice of deposition pursuant to Rule 30(b)(6) of the Federal Rules of Bankruptcy Procedure.

The Deposition, scheduled on October 20 at the offices of Richards, Layton & Finger, P.A., at One Rodney Square, 920 North King Street, in Wilmington, Delaware, will involve topics relating to HSBC's objection to the bidding procedures and any potential objections to the Debtors' sale motion or other objections that HSBC plans to file in the Debtors' proceedings.

David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day,serve as the Debtors' lead counsel. The Debtors' financialadvisor is Capstone Advisory Group and their investment banker isLehman Brothers, Inc. The Debtors' claims agent is KurtzmanCarson Consultants L.L.C.

Boscov's listed assets of $538 million and liabilities of$479 million in its bankruptcy filing.

BOSTON SCIENTIFIC: S&P's Rtng Unmoved by Court's Appeal Rejection-----------------------------------------------------------------Standard & Poor's Ratings Services said that the U.S. Supreme Court's rejection of an appeal by Boston Scientific Corp. (BB+/Negative/--) regarding last week's $703 million jury finding (U.S. District Court in Delaware) will have no impact on the rating. Boston Scientific continues to explore other avenues of appeal. In the event that it was unsuccessful, the company had $1.6 billion of cash as of June 30, 2008.

In addition, since amended covenants permit a $500 million carve-out for legal judgments, the company's ability to comply with covenants will not be compromised. While the $703 million is somewhat higher than S&P's expectations (against a total legal reserve of $1 billion), the increment is not sufficient to impact ratings, given the company's liquidity position.

CATALYST ENERGY: PSC Conditionally Approves Transfer of Customers-----------------------------------------------------------------The Associated Press reported Tuesday that the Georgia Public Service Commission said natural gas marketer Catalyst Energy would continue to serve its customers through Thursday to ensure a smooth transition to another provider. The PSC conditionally approved a request by Catalyst to transfer its customers to MX Energy in the wake of its Chapter 11 bankruptcy filing last week.

The transfer is subject to bankruptcy court approval, according to the report. Under terms of the agreement, MX Energy would honor fixed-rate contracts of Catalyst's customers and send each written notice of the transfer, and provide a copy of rights, terms and conditions.

Catalyst Energy listed assets of less than $50,000. According toThe Atlanta Journal-Constitution, the company said that it has $20 million in liabilities.

CE GENERATION: Fitch Lifts $400MM Bonds Rating to BBB- from BB+---------------------------------------------------------------Fitch has upgraded the rating of CE Generation LLC's $400 million secured bonds due 2018 to 'BBB-' from 'BB+'. The Rating Outlook is Stable. The rating action results from the revision in Fitch's long term view of natural gas prices which enhances CE Gen's cashflow in a low price scenario. The rating reflects CE Gen's long-term credit profile when a vast majority of CE Gen's cash flow derives from Salton Sea, and Salton Sea's output is no longer sold at fixed prices.

CE Generation is a portfolio of ownership interests in ten geothermal and three natural gas fired generation facilities. The ten geothermal facilities (Salton Sea) are separately encumbered with project-level debt. The three remaining facilities are unencumbered at the project level. CE Generation also receives fees for providing operating services to the Saranac facility. The project-level debt is structurally senior to the CE Generation debt.

Historically, CE Gen received significant cash flows from both Saranac and Salton Sea. Upon the expiry of Saranac's contracts in 2009, Fitch anticipates that distributions from Saranac will fall away and that CE Gen's credit profile will be analogous to the subordinated debt of Salton Sea. Salton Sea is primarily dependent upon short-run avoided cost (SRAC)-based energy payments from Southern California Edison (SCE, rated 'A-', with a Stable Outlook by Fitch). SRAC is currently fixed until 2012 and will be calibrated to market conditions thereafter.

The California Public Utilities Commission is currently considering significant changes to the SRAC formula, which is indexed to the price of natural gas. The anticipated revision of the SRAC formula will negatively affect CE Gen's financial performance. However, the anticipated diminution due to the calculation of SRAC is more than offset by the higher natural gas prices that Fitch now assumes in a low price scenario.

The rating action is a direct result of the increase in Fitch's natural gas price stress. Consolidated DSCRs during the market-based SRAC period in a low natural gas scenario are in the 1.60x-1.70x range. While these stress case DSCRs are strong for the rating category, Fitch believes that uncertainty regarding the ultimate form of the SRAC calculation constrains the rating.

Note that Fitch considers consolidated DSCRs to be the appropriate metric for evaluating CE Gen's credit quality as DSCRs at CE Gen would fall below 1x prior to tripping the cash trap mechanism under the Salton Sea indenture.

The report said that the plan has the support of the company's first-tier secured lenders.

According to the magazine, Sleep Innovations proposes to convert part of its debt to new equity, and that it will seek to secure debtor-in-possession and exit financing of up to $40 million.

The company blamed its current financial troubles to the rise in petrochemical raw material costs, the sluggish economy and the crisis in the housing markets.

The report adds that Sleep Innovations, which is privately held, had sales of $432.6 million in 2007. The company purchased Advanced Urethane Technologies last year for $88 million.

Home Textiles Today says that the company listed $285 million in first-tier secured debt, $340 million of second-tier secured debt and $34 million in trade debt. The company's 30 largest unsecured creditors accounted for $16.3 million in debt. This list included Dow Chemical Co., with $3.6 million; BASF, owed $2.9 million; and Standard Fiber, owed $2.2 million.

Mr Heller said that prior to filing for bankruptcy, the company had considered numerous alternatives to resolve its financial problems, which included the the sale of some or all of its assets.

Headquartered in West Long Branch, N.J., Comfort Co. Inc. and its affiliates -- http://www.sleepinnovations.com/-- make and sell foam bedding, sleep products and accessories. The company, Sleep Innovations Inc., and nine other debtor-affiliates filed separate petitions for Chapter 11 relief on Oct. 3, 2008 (Bankr. D. Del.Lead Case No. 08-12305). Michael R. Lastowski, Esq., Richard W. Riley, Esq., at Duane Morris LLP, represented the Debtors as counsel. When the Debtors filed for protection from their creditors, they listed total assets of $100 million to $500 million, and total debts of $100 million to $500 million.

CORNERSTONE MINISTRIES: Court Approves Sale Bidding Procedures--------------------------------------------------------------The Hon. Robert E. Brizendine of the United States BankruptcyCourt for the Northern District of Georgia approved biddingprocedures for the sale of Cornerstone Ministries Investments Inc.'s real property, free and clear of liens, claims, and encumbrances.

Judge Brizendine authorized the Debtor to pay any outstandingad valorem real property taxes, and other normal and customaryclosing costs from the proceeds of the sale. Remaining netproceeds must be held in an interest-bearing account and may notbe disbursed without the Court's approval.

Bidders are required to deliver a $50,000 deposit at the salehearing. During the public auction, bidding for the Debtor'sproperty will be conducted in minimum incremental bids of $10,000.

The Debtor selected Ultra Properties and Remax Greater Atlanta asbrokers. As part of the deal, each broker will be paid 5%commission at closing.

About Cornerstone Ministries

Headquartered in Cumming, Georgia, Cornerstone MinistriesInvestments Inc. -- http://www.cmiatlanta.com/-- is engaged in financing the acquisition and development of facilities for use bychurches, faith-based or non-profit organizations and for-profitorganizations. The company offers development, construction,bridge and interim loans, usually due within one to three years. The company makes loans to four distinct groups of borrowers,including churches, senior housing facilities, family housingdevelopment projects and daycare/faith-based schools.

The company filed for Chapter 11 protection on Feb. 10, 2008 (N.D.Ga. Case No. 08-20355). J. Robert Williamson, Esq., at Scrogginsand Williamson, represents the Debtor. The Debtor selected BMCGroup Inc. as claims, noticing and balloting agent. As ofMarch 1, 2008, the Debtors' summary of schedules showed $187,661,169 in total assets and $178,586,731 in total debts.

On Sept. 8, 2008, the Court extended the Debtor's exclusiveperiods to (i) file a Chapter 11 plan until Dec. 7, 2008, andsolicit acceptances of that plan until Feb. 5, 2008.

CORPORACION DURANGO: Fitch Puts 'D' Rating on Coupon Non-Payment----------------------------------------------------------------Fitch Ratings has downgraded the foreign and local currency IDRs of Corporacion Durango S.A. de C.V. to 'D' from 'CC' and has affirmed its 'CC/RR4' rating of the company's notes due in 2017. All ratings have been removed from Rating Watch Negative.

Fitch's action follows the announcement by the company that it will not make a coupon payment on its 2017 notes, and that it has initiated a debt restructuring in Mexico through a Concurso Mercantil process.

As of June 30, 2008, Durango had US$533 million of debt and US$35 million of cash and marketable securities. Short-term debt totaled US$12 million and the company was scheduled to make a US$26.5 million coupon payment on October 5.

Durango's debt consists primarily of the US$509 million notes due in 2017.

During the latest 12 months ended June 30, 2008, Durango generated US$65 million of EBITDA, a decline from US$126 million of EBITDA during the LTM ended June 30, 2007. The decline in the company's operating profitability is due to continued high prices for old corrugated containers, a key raw material, and rising energy costs. The increase in these two costs, plus other factors, have led to a rise in the Durango's unit cost per ton to US$619 for the quarter ended June 30, 2008, from US$502 during the same quarter in 2007. Price increases have not offset these cost increases, as Durango's prices have risen on average by only US$61 per ton during this time period.

CROWN CITY: Fitch Puts Default Ratings on Six Classes of Notes--------------------------------------------------------------Standard & Poor's Ratings Services lowered its ratings to 'D' on the class A, E-1, E-2, Income 1, and Income 2 notes issued by Crown City CDO 2005-1 Ltd. and the class D, D-2, and E notes issued by Crown City CDO 2005-2 Ltd. At the same time, S&P withdrew its ratings on the class B, C, and D notes issued by Crown City CDO 2005-1 Ltd. and the class A-1, B-1, B-2, C, and Income notes issued by Crown City CDO 2005-2 Ltd. because these notes were fully repaid.

The downgrades of the class A, E-1, and E-2 notes issued by Crown City CDO 2005-1 Ltd. and the class D, D-2, and E notes issued by Crown City CDO 2005-2 Ltd. were due to the early termination of the notes, triggered by an indenture event of default following Lehman Bros. Holdings Inc.'s bankruptcy filing on Sept. 15, 2008. Upon liquidation, the notes experienced interest shortfalls because they relied on Lehman Bros. to make up the spread component of the interest due. The interest shortfall caused the transactions to dip into principal cash to pay the interest shortfalls, which led to ultimate principal losses on the notes.

Although the losses were minimal, the missed principal constituted a default of the rating as defined by Standard & Poor's. The Income 1 and Income 2 notes were backed by collateral issued by Lehman Bros., which caused a nonpayment of all principal owed to the Income 1 and Income 2 noteholders.

S&P withdrew the ratings on the class B, C, and E notes issued by Crown City CDO 2005-1 Ltd. and the class A-1, B-1, B-2, C, and Income notes issued by Crown City CDO 2005-2 Ltd. after full interest and principal were paid to the respective noteholders.

CREDIT SUISSE: S&P Lowers Ratings on Four Classes of Certificates-----------------------------------------------------------------Standard & Poor's Ratings Services lowered its ratings on four classes of commercial mortgage pass-through certificates from Credit Suisse Commercial Mortgage Trust Series 2006-C5. Concurrently, S&P affirmed its ratings on 20 other classes from this series.

The downgrades reflect anticipated credit support erosion upon the eventual resolution of one of the three assets with the special servicer, LNR Partners Inc. The lowered ratings also reflect credit concerns relating to 12 loans with reported low debt service coverage and one loan that S&P expects to have a low DSC when its initial interest-only period ends.

The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios.

There are three assets with the special servicer totaling $11.1 million (0.3%). Two assets are 90-plus-days delinquent, while one is current. Details of these loans are:

-- The Country Club Marketplace is the largest loan with LNR ($4 million total exposure) and is secured by a 29,366- sq.-ft. mixed-used property in Salt Lake City, Utah. The loan was transferred to LNR on Aug. 13, 2008, due to monetary default. The borrower has offered a deed-in-lieu to relinquish control of the property; LNR is currently evaluating the offer. Standard & Poor's analysis indicates the eventual resolution of the asset could result in a moderate loss.

-- The Brighton Apartments loan ($2.1 million total exposure) is secured by a 48-unit, multifamily property in Reading, Pennsylvania. The loan was transferred to LNR on July 14, 2008, due to monetary default. The borrower has brought all of the delinquent payments current, except for default interest; the borrower is currently in discussion with LNR on the matter. If the borrower makes all payments and brings the loan to current status, S&P expects the loan to be returned to the master servicer, KeyCorp Real Estate Capital Markets Inc. after a 90-day monitoring period.

-- The Tower Station loan ($5.2 million total exposure) is current in payment. The loan is secured by a 23,183-sq.- ft. retail property in West Chicago, Illinois, and was transferred to LNR on Oct. 1, 2008, due to imminent default. The transfer event occurred after the September remittance date. The borrower reported that some of the tenants were having financial difficulties and were not paying their contracted rent; LNR is evaluating the situation.

S&P is concerned with 12 of the 33 loans ($552.6 million, 16%) that have a reported DSC of less than 1.0x. The 12 loans that are current credit concerns are secured by a variety of property types and have an average balance of $3.4 million. These loans have seen a weighted average decline in DSC of 46% since issuance. The remaining loans are secured by properties that are in various stages of renovation or lease-up. S&P does not consider these loans to be credit concerns because it expects the net cash flow available for debt service to improve in the near future or there are significant debt service reserves available.

In addition, S&P is concerned with one ($13.5 million) period IO loan that it expects to have a low DSC when the IO period ends.

As of the Sept. 17, 2008, remittance report, the collateral pool consisted of 304 loans with an aggregate trust balance of $3.42 billion, compared with the same number of loans totaling $3.43 billion at issuance. KeyCorp reported financial information for 98% of the pool. Ninety-five percent of the servicer-provided information was full- and partial-year 2007 data. Based on this data, Standard & Poor's calculated a weighted average DSC of 1.37x, up slightly from 1.36x at issuance. To date, the trust has not experienced any losses.

The top 10 exposures have an aggregate outstanding balance of $1.29 billion (38%) and a weighted average DSC of 1.25x, down from 1.40x at issuance. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 exposures. Eleven were characterized as "fair", one was characterized as "excellent," while the remaining properties were characterized as "good."

The credit characteristics of the 280 Park Avenue, W New York - Union Square, and North Ranch Mall loans are consistent with those of investment-grade rated obligations. Standard & Poor's adjusted values for these loans are comparable to the valuations at issuance.

KeyCorp reported a watchlist of 25 loans ($341.7 million, 10%). The largest loan on the watchlist, 720 Fifth Avenue, is also the third-largest exposure in the transaction. The loan appears on the watchlist because it reported a DSC of 1.0x for year-end 2007. The loan has various reserves in aggregate of $1.9 million and has reported 77% occupancy, up from 70% at issuance. The remaining loans are on the watchlist primarily because of low occupancy or a decline in DSC since issuance.

Standard & Poor's identified 19 collateral properties securing 14 loans ($235 million; 7%) in areas affected by Hurricane Ike. Generally, the properties have suffered minor damages; however, to date, KeyCorp has not been able to contact borrowers for all of the affected properties. S&P will continue to monitor the situation as more information becomes available.

Standard & Poor's stressed the loans with credit issues as part of its analysis. The resultant credit enhancement levels support the lowered and affirmed ratings.

The CreditWatch placement follows the company's intention to repay permanent debt using $300 million of net proceeds from the sale of its seafood business. Del Monte has not yet determined the final allocation of repayment to senior secured term loan debt.

As of July 27, 2008, the company had about $1.9 billion of total debt.

The outlook revision reflects the repayment of about $300 million of debt following the sale of the lower-margin and volatile seafood business, including Starkist. Pro forma for the transaction, leverage is estimated to be about 4.2x for the 12 months ending July 27, 2008, compared with 4.9x before the sale as of July 27, 2008.

The ratings on Del Monte reflect moderate debt levels and exposure to rising commodity costs. The company holds leading market shares in the processed fruit, vegetable, tomato, broth, and pet food markets, with brand names including the $1 billion Del Monte brand, as well as Meow Mix and Milk-Bone.

The outlook on Del Monte is stable. Leverage has declined closer to S&P's expectations following the sale of the seafood business, and S&P believes covenant cushion should improve. S&P expects Del Monte will apply its free cash flow to debt reduction and maintain leverage near 4x and funds from operations to total debt near 15%. While S&P is concerned about continued EBITDA margin deterioration, S&P expects the company to improve operating performance in the second half of fiscal 2009.

"We could revise the outlook to negative if performance and covenant cushion does not improve as expected and credit measures weaken, or financial policy becomes more aggressive," noted Standard & Poor's credit analyst Alison Sullivan. An outlook revision to positive is unlikely in the near term, but would require strong covenant cushion and leverage sustained at or below 3.5x. "This could occur in a scenario of mid- to high-single-digit revenue growth and a 250-basis-point EBITDA margin expansion over fiscal 2008 levels," she continued.

DELTA PETROLEUM: Fitch Holds 'B-' Corp. Credit; Removes Pos. Watch------------------------------------------------------------------Standard & Poor's Ratings Services affirmed its 'B-' corporate credit rating on Delta Petroleum Corp. and removed the rating from CreditWatch with positive implications where it was placed Jan. 3, 2008. The original placement followed Tracinda Corp.'s announcement of a $684 million investment in Delta. The outlook is stable.

At the same time, Standard & Poor's lowered its ratings on Delta's $150 million senior unsecured notes due 2015 and $115 million convertible notes due 2037 to 'CCC' from 'CCC+', and assigned a recovery rating of '6', reflecting expectations for negligible recovery in the case of default. S&P also removed the senior unsecured rating from CreditWatch.

Standard & Poor's had expected that Delta would use proceeds from the investment to accelerate development of its Piceance and Paradox Basin properties, including related infrastructure. However, the subsequent $410.5 million acquisition of properties in the Piceance basin from EnCana Oil & Gas (USA) Inc. consumed much of the capital expected to fund such growth. As a result, Delta's near-term capital spending of around $375 million will depend on internal cash flows and availability on its credit facility.

"Ratings reflect the concern that such meaningful spending will increase leverage and weaken liquidity if expected production levels or hydrocarbon prices are not achieved, something that has hurt Delta in the past," said Standard & Poor's credit analyst Paul Harvey.

Financial measures are likely to remain weak relative to those of Delta's peers. High spending and resulting debt escalation will offset otherwise improving cash flow generation from higher production levels.

The ratings on Delta reflect its very aggressive growth strategy, high debt leverage, elevated cost structure, modest reserve size, exposure to volatile Rocky Mountain gas differentials, and high percentage of proved undeveloped reserves. Ratings also reflect the company's good reserve life, high operatorship of its properties, near-term production growth, and strong track record of reserve replacement.

"The rating action reflects our belief that the company is at a heightened risk of a covenant violation in the near term, given the weaker economic environment and step-downs in covenant levels," said Standard & Poor's credit analyst Dan Picciotto. Domestic economic conditions have remained soft and conditions in Europe, where Euramax generates about one-third of its sales, have deteriorated. The company had received covenant relief earlier in 2008 and further relief could prove expensive or difficult to obtain, given credit market conditions.

However, Euramax generates positive cash flow and should benefit from the recent pullback in the cost of commodity inputs, particularly aluminum.

The ratings on Euramax reflect the its highly leveraged financial risk profile and weak business risk profile, although the company does have leading niche market positions for some product lines, fair geographic diversity, and limited maintenance capital expenditure requirements.

Euramax manufactures products made from aluminum, steel, and other materials for the building construction and transportation markets. Products include rain-carrying systems for contractors and the do-it-yourself markets, and aluminum sidewall for the towable recreational vehicle and manufactured housing markets. Euramax manufactures its products in the U.S., the U.K., the Netherlands, and France. Sales outside the U.S. make up about one-third of total company sales and are primarily in Western Europe.

The company has leading positions in several product niches, helping it achieve a degree of pricing power. Many of Euramax's products involve significant commodity inputs, the prices of which have risen sharply over the past several years but have recently pulled back. Demand in some of the company's key end markets has declined, including the domestic RV and building construction markets.

In June 2005, Goldman Sachs Capital Partners and Euramax management acquired the company for about $1 billion. A large portion of the purchase price was financed with debt, and the company's balance sheet remains highly leveraged. As of June 27, 2008, debt to EBITDA approached 10x, EBITDA interest coverage was about 1.3x, and FFO to debt was slightly positive. Standard & Poor's Ratings Services views the PIK notes as mostly debt-like.

Nonetheless, they provide somewhat better credit protection for the senior secured debt holders because of their non-cash-pay characteristics and their structural subordination to senior secured debt.

The company has very limited headroom under its covenants. Euramax's cash balance as of June 27, 2008, was about $14 million. Along with operating cash flow, the company's sources of liquidity include its $80 million revolving credit facility and its $60 million accounts-receivable securitization facility due 2011. The securitization facility was fully drawn at the end of the second quarter. Euramax's working capital is subject to seasonal swings and affected by changes in commodity input costs. Capital expenditures should be modest.

S&P could lower the ratings if the company violates its covenants and the likelihood of obtaining a satisfactory cure worsens or if the company fails to meet its financial obligations. A positive ratings action could occur if the company avoids a covenant violation or, if the company does violate a covenant, the company is able to receive adequate relief.

FINANCIAL ASSET: Fitch Trims Ratings on Two Classes to 'C/DR6'--------------------------------------------------------------Fitch Ratings has taken various rating actions on Financial Asset Securitization, Inc. transactions:

The rating actions were taken as part as Fitch's ongoing surveillance process of existing transactions.

FIRST NATIONWIDE: Fitch Affirms Ratings on 12 Classes of RMBS-------------------------------------------------------------Fitch Ratings has affirmed 12 classes and downgraded two classes of residential mortgage-backed securities on these First Nationwide Prime RMBS transactions:

Depending upon the amount of net proceeds received and the structure of any such transaction, Fitch also believes Freescale's successful divestiture or JV of its cellular business could have a neutral to positive affect on ratings.

Nonetheless, the current rating Outlook remains Negative and continues to incorporate Fitch's expectations for a meaningfully more challenged revenue growth and profitability expansion story through the intermediate-term and within the context of a decidedly weakened macroeconomic environment, as well as market share erosion and ongoing competitive difficulties for a number of key customers, including its largest cellular customer, Motorola Inc. (rated 'BBB'/Negative Rating Watch by Fitch) and the big three U.S. auto makers, and weaker wireless infrastructure spending by U.S. carriers.

Given that Freescale, under the terms and conditions of its bank credit agreements and bond indentures, can use net proceeds from asset divestitures for debt reduction or reinvesting in the business, Fitch believes a divestiture could result in strengthened credit protection measures and more stable operating performance. Fitch believes that Freescale's consolidated profitability margins, as measured by operating EBITDA, would increase with the disposition of the comparatively lower-margin cellular business, based upon Fitch's estimates prior to the company discontinuing the disclosure of segment profitability in the fourth quarter of 2007.

Fitch estimates EBITDA margins for the Wireless and Mobile Solutions Group (within which the Cellular business was formerly included) were meaningfully more volatile and anywhere from 33%-75% lower in any give quarter of 2006-2007 than those of Freescale's other main segments, Transportation & Standard Products and Networks & Computing Systems, at the time. Given Motorola's, which typically represent more than 90% of segment and 25% of consolidated sales, ongoing operating weakness over the past several quarters, Fitch believes profitability margins for the Cellular business are likely to have remained flat at best and possibly lower, despite the company's aggressive cost cutting actions.

For the latest 12 months ended June 27, 2008, Fitch estimates Freescale's total leverage and interest coverage was 6.4 times and 1.9x, respectively, at the low end of the current rating category.

While Fitch believes that -- depending upon the structure of any transaction Freescale could meaningfully reduce research and development spending, which is disproportionately invested in the Cellular business -- Fitch also anticipates the structure of the transactions, at the very least, would include some form of intellectual property sharing or licensing agreement, as the company typically transitions its leading-edge technology developed within the cellular business through the rest of its product portfolio.

Furthermore, Fitch is concerned that Freescale's decision to divest its cellular business is in part being driven by the unit's limited success in winning meaningful new handset original equipment manufacturer designs, despite having gained socket share at Research In Motion and alluding to a yet-to-be-named second major handset provider processor win, suggesting the company may be challenged to find a buyer or partner.

Fitch may downgrade Freescale if:

-- Credit protection measures deteriorate due to meaningful erosion in the company's profitability or free cash flow, including profitability lost in any potential sale of the cellular business without receiving a commensurate level of net proceeds for debt reduction; and

-- Management does not execute on its restructuring efforts, including successful site consolidation, asset sales, and meaningful improvement in the company's cash conversion cycle.

Fitch believes Freescale's liquidity was adequate as of June 30, 2008 and supported by approximately $1.2 billion of cash and cash equivalents, approximately half of which is located in the U.S., and an undrawn $750 million revolving bank credit facility expiring Dec. 1, 2012; Fitch anticipates annual free cash flow will be break even to $200 million annually over the next few years, modestly supporting liquidity, although free cash flow could be modestly boosted by lower capital spending associated with the cellular business.

However, Fitch notes that most of these capital investments are outsourced to foundries as part of the company's asset light strategy, due to the advanced technology associated with handset production and manufacturing. With no borrowings outstanding under the revolving bank credit facility, Freescale's only debt amortization until 2013 is 1% per annum under the term loan facility, or approximately $35 million per year.

FORD MOTOR: Fitch Junks Issuer Default Rating on Credit Crisis--------------------------------------------------------------Fitch Ratings has downgraded the Issuer Default Rating of Ford Motor Company and Ford Motor Credit Company by one notch to 'CCC' from 'B-'.

This rating action reflects the growing impact of the credit crisis on industry sales volumes, supply chain financial risks, the financial health of dealerships and the capital advantage of transplants. These issues are compounding the already-severe stresses resulting from weakening economic conditions and the migration to fuel-efficient vehicles. Plummeting sales volumes will accelerate negative cash flows in the second half of 2008 and will result in deep cash drains through 2009.

Despite significant progress in Ford's cost reduction efforts and an easing of commodity price pressures, Fitch projects that without additional capital raising or asset sales, Ford will reach the minimum required operating cash levels in the second half of 2009.

Although Ford remains the best positioned among the Detroit Three in terms of liquidity, financial resources, manufacturing footprint and intermediate-term product plans, these relative attributes are being overwhelmed by industry conditions and the impact of the credit crisis. Fitch expects that industry volumes will not trough until 2009.

The current credit crisis has augmented a number of risk factors listed below, which apply to all the Detroit Three:

-- Of primary concern is the impact of the credit crisis on the extension of credit throughout the supply chain. The decline in production among the Detroit Three, higher commodity prices and other margin pressures, and lack of access to capital is likely to produce further bankruptcies within the supply chain. The potential contraction of trade credit throughout the industry, and the critical nature of trade credit to the capital structure of the supply industry and the Detroit Three, poses a high degree of risk in the event that capital market conditions continue to contract;

-- Industry volumes will continue to ratchet down through at least 1H'09 due to the decreasing ability of retail consumers to obtain competitive financing from the financing arms of the manufacturers or from third-party lenders. This adds to the impact of the pullback in leasing on sales and production volumes;

-- The asset-backed securities market has become constricted, in terms of availability and pricing, for both auto loans and floorplan receivables;

-- Operating and financial stresses at dealerships continue to escalate, impacting their ability to hold inventory and to push sales volumes. Challenges include the higher cost and reduced availability of floor-plan financing, more limited retail financing capabilities, and an increasing number of bankruptcies;

-- The ability of the Detroit Three to access the capital markets, a component of earlier plans to maintain liquidity, is currently severely limited. By the same token, asset divestitures are expected to be very challenging to complete, with sales proceeds unlikely to meet previous expectations or to sustain liquidity;

-- The combination of a wide margin advantage and superior capital resources provide the transplants with an overwhelming competitive advantage during the current cycle. Toyota's announcement that it will be offering 0% financing across eleven of its models is a crippling competitive tool in the current environment which will further impact volumes and pricing of the Detroit Three;

-- A bankruptcy filing by a major competitor would further affect pricing and the financial risks of the supply chain, and could force other manufacturers to follow.

Ford's cash position at the end of the second quarter was approximately $26.6 billion. In the absence of further capital-raising, Ford's liquidity could decline to the minimum required level of $10-to-12 billion within the next eighteen months. Potential sources of liquidity include the federal loan guarantee program, renegotiation of the VEBA financing structure and timetable, and very modest levels of external capital and asset sales. Fitch expects that Ford will benefit from a federal loan guarantee program, although the timing, amount, structure, term and pricing are uncertain.

Ford retains access to its $11.5 billion revolver but the total commitment has been reduced by the bankruptcy of Lehman Brothers, which had an $890 million commitment. The revolver is not subject to restrictive covenants, but contains a borrowing base which Fitch expects could further limit availability over the near term. Although Fitch expects a modest level of capital-raising will be completed, including the federal government loan program, cash drains through 2010 will limit the potential to boost liquidity to comfortable levels.

Ford has been active in equity for debt exchanges, which has helped the company manage its debt levels and near-term refinancing requirements, but which has not materially sustained liquidity. Ford's underfunded pension position will grow as a result of declines in the equity and fixed-income markets, but does not pose a material near-term funding risk.

Outside of the risks posed by the credit crisis, the combination of federal loan guarantees and revolving credit draws should provide adequate resources to reach 2010. Although negative cash flows are expected to continue through 2010, Ford is expected to benefit from the terms of the United Auto Workers health care agreement and any potential upturn in the housing market and general economic conditions.

European operations, which have demonstrated strong improvement in its operating performance, will weaken over the near term as the economic environment and industry sales deteriorate.

Fitch has also downgraded Recovery Ratings for Ford's senior unsecured debt to 'RR6', indicating minimal recoveries for unsecured debtholders in the event of a default. Unsecured holders have become impaired by the high level of senior secured debt that Ford has incurred, as well as deterioration in asset values for the North American and European operations, and several asset holdings.

The downgrades reflect expected credit support erosion upon the eventual resolution of two of the three specially serviced assets in the pool. In addition, the lowered ratings reflect S&P's concerns about eight loans ($74.6 million) with reported low debt service coverage and one loan ($6.1 million) that S&P projects will have a low DSC when the initial interest-only period ends.

The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios.

There are three assets with the special servicer, LNR Partners Inc., totaling $20.2 million (0.5%). Details of the specially serviced assets are:

-- The 1111 High Road asset is a 136-unit student housing property in Tallahassee, Florida, with a total exposure of $11.2 million. The loan was transferred on July 24, 2007, due to imminent default. The asset is in foreclosure, and an appraisal reduction amount of $1.8 million is in effect. Standard & Poor's expects a moderate loss upon the liquidation of the asset.

-- Cortina Inn & Resort is secured by a 96-room full service hotel in Mendon, Vt., and has a total exposure of $8.2 million. This loan was transferred in November 2007 due to monetary default. The property was closed pending testing by the Vermont Health Department, which found evidence of Legionnaires' bacteria in the hotel. The asset is in foreclosure, and an ARA of $1.9 million is in effect. Standard & Poor's expects a substantial loss upon the liquidation of the asset.

-- The Walgreens - Mundelein IL loan has a total exposure of $2.1 million and is secured by a retail property in Mundelein, Illinois, that is 100% occupied by Walgreens. The loan was transferred in October 2007 because of a lawsuit by Chicago Tile Insurance Co. against the borrower for failure to pay off a prior mortgage with loan proceeds from the subject loan. The borrower has kept the loan current, and the trust's counsel has put First American Title Insurance Company on notice for potential claim. Standard & Poor's expects a minimal loss, if any, upon the resolution of this loan.

There are 31 loans ($946.3 million) in the pool that have reported a low DSC, and eight ($74.6 million) of them are credit concerns. The 31 loans are secured by a variety of property types with an average balance of $30.5 million and have experienced a weighted average decline in DSC of 55% since issuance. The eight loans that are credit concerns are secured by a variety of multifamily, hotel, industrial, and retail properties. These loans have experienced a combination of declining occupancy and higher operating expenses and were stressed in S&P's analysis.

The remaining loans have mitigating factors that offset the low coverage. In addition, there is one period IO loan that is a credit concern ($7.3 million) and will have a low DSC when its initial IO period ends in 16 months. This loan has also experienced declining occupancy and higher operating expenses.

As of the Sept. 10, 2008, remittance report, the collateral pool consisted of 198 loans with an aggregate trust balance of $3.95 billion, compared with the same number of loans totaling $3.94 billion at issuance. The master servicers, KeyCorp Real Estate Capital Markets Inc. and Bank of America N.A., reported financial information for 89% of the pool. Ninety-five percent of the servicer-provided information was full-year 2007 data. Standard & Poor's calculated a weighted average DSC of 1.38x for the pool, down from 1.45x at issuance. Except for the two aforementioned loans, all the loans in the pool are current. To date, the trust has experienced no losses.

The top 10 loans have an aggregate outstanding balance of $1.79 million (45%). Excluding the 666 Fifth Avenue loan, the Manhattan Portfolio loan, and the Enclave loan, Standard & Poor's calculated a weighted average DSC of 1.27x, compared with 1.33x at issuance. Two of the top 10 loans are on the master servicer's watchlist and are discussed below. Standard & Poor's reviewed property inspections provided by the master servicer for six of the assets underlying the top 10 exposures. Eight were characterized as "fair," two were characterized as "excellent," and 32 were characterized as "good."

The master servicers reported a watchlist of 25 loans ($557.3 million, 14%). The third-largest loan, Manhattan Apartment Portfolio ($204 million, 5%), is secured by 1,083 apartment units and two retail units in 36 apartment buildings on the Upper West Side of Manhattan. The loan appears on the watchlist because of a low DSC of 0.4x as of year-end 2007. A $38 million reserve was established for debt service shortfalls and capital improvements during the term of the loan. The remaining balance for the debt service reserve is $18 million. Occupancy was 93% as of year-end 2007.

The eighth-largest loan, The Enclave ($225 million, 4%), is secured by a first mortgage fee interest in a 1,119-unit multifamily property in Silver Springs, Maryland. The loan was placed on the watchlist because of a DSC of 0.82x as of Dec. 31, 2007. The property is currently undergoing renovation, and the renovation project is approximately 90% complete. A $26.3 million debt service reserve was established at closing, and the remaining balance is $9.7 million. This loan had credit characteristics consistent with those of an investment-grade obligation at issuance. Standard & Poor's adjusted value for this loan is comparable with its level at issuance.

Standard & Poor's stressed the loans on the watchlist and the other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the lowered and affirmed ratings.

HAWKEYE MANAGEMENT: Sovereign Bank Is One of Largest Creditors--------------------------------------------------------------Boston Business Journal reports that Hawkeye Management Inc. named Sovereign Bank as one of its largest creditors. Sovereign Bank holds a $2.6 million secured claim against Hawkeye Management, the report says.

According Boston Business, a property information package put together by JJ Manning Auctioneers indicates that a foreclosure auction on Hawkeye Management's Sea Breeze development project had been scheduled for Sept. 26, 2008

North Chatham, Massachusetts-based Hawkeye Management, Inc. is run by Douglas Levings. It owned the Sea Breeze condos in Dennisport, which entails 40 year-round condos. Sovereign held the mortgage on the real estate.

The company filed for Chapter 11 protection on Sept. 25, 2008 ( Bankr. D. Mass. Case No. 08-17232). Thomas Rugo, Esq., who has an office at Barnstable, Massachusetts, represents the company in its restructuring effort. The company listed assets of $4,616,528 and debts of $4,700,064.

HRP MYRTLE: Wants to Employ Paul Hastings as Bankruptcy Counsel---------------------------------------------------------------HRP Myrtle Beach Holdings LLC and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ Paul, Hastings, Janofsky & Walker LLP as their bankruptcy counsel.

Paul Hastings will:

a) advise the Debtors of their rights, powers and duties as debtors and debtors in possession while operating and managing their respective businesses and properties under Chapter 11 of the Bankruptcy Code;

b) prepare on behalf of the debtors all necessary and appropriate applications, motions, proposed orders, other pleadings, notices, schedules and other documents, and reveiwing all financial and other reports to be filed in these bankruptcy cases;

c) advise the Debtors concerning, and preparing responses to, applications, motions, other pleadings, notices and other papers that may be filed by other parties in these bankruptcy cases;

d) advise the Debtors with respect to, and assisting in the negotiation and documentation of, financing agreements and related transactions;

e) review the nature and validity of any liend asserted against the Debtors' property and advise the Debtors concerning the enforceability of such liens;

f) advise the Debtors regarding their ability to initiate actions to collect and recover property for the benefit of their estates;

g) advise and assist the Debtors in connection with any potential property dispositions;

h) advise the Debtors concerning executory contract and unexpired lease assumptions, assignments and rejections as well as lease restructurings and recharacterizations;

i) advise the Debtors in connection with the formulaion, negotiation and promulgation of a plan or plans of reorganization, and related transactional documents;

j) assist the Debtors in reviewing, estimating and resolving claims asserted against the Debtors' estates;

k) commence and conduct litigation necessary and appropriate to assert rights held by the Debtors, protect assets of the Debtors' Chapter 11 estates or otherwise further the goal of completing the Debtors' successful reorganization; and

l) provide non-bankruptcy services for the Debtors to the extent requested by the Debtors.

Paul E. Harner, Esq., a partner at Paul Hastings in Chicago, Illinois, bills at $820 per hour. The firm's other professionals who are expected to be primarily involved in the case and their rates are:

The firm will also be reimbursed for its actual and necessary out-of-pocket expenses.

Mr. Harner attests that his firm does not have any adverse interest to the Debtors' estates and is a "disinterested person" as the term is defined in in Section 101(14) of the Bankruptcy Code.

A hearing on the matter is scheduled for 4:00 p.m. on Oct. 22, 2008, at the 5th floor of the U.S. Bankruptcy Court, 824 Market St., Courtroom #5 in Wilmington, Delaware. Objections, if any, are due by Oct. 15, 2008.

About HRP Myrtle

Based in Myrtle Beach, South Carolina, HRP Myrtle Beach Holdings, LLC -- owns and operates Hard Rock Park, a rock-n-roll theme park in Myrtle Beach, South Carolina, under a long-term license agreement with Hard Rock Cafe International (USA), Inc. The company and six of its affiliates filed for Chapter 11protection on Sept. 24, 2008 (Bankr. D. Del. Lead Case No.08-12193). Steven Goodwin will serve as the Debtors' chief executive officer. The U.S. Trustee for Region 3 has not appointed creditors to serve on an Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed assets and debts of between $100 million and $500 million each.

HRP MYRTLE: Wants Court to Approve Richard Layton as Co-Counsel---------------------------------------------------------------HRP Myrtle Beach Partners LLC and its debtor-affiliates ask permission from the U.S. Bankruptcy Court for the District of Delaware to employ Richards, Layton & Finger PA as their bankruptcy co-counsel.

RL&F will:

a) advise the Debtors of their rights, powers and duties as debtors and debtors in possession;

b) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of action on the Debtors' behalf, the defense of any actions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved, and the preparation of objections to claims filed against the Debtors' estates;

c) prepare on behalf of the Debtors all necessary motions, applications, answers, orders, reports and papers in connection with the administration of the Debtors' estates; and

d) perform all other necessary legal services in connection with the bankruptcy cases.

Daniel J. DeFranceschi, a director of RL&F, discloses that he bills $550 per hour. He further discloses that other firm professionals bill:

RL&F will charge the Debtors for all other expenses incurred in connection with their cases.

Mr. DeFranceschi declares that his firm does not have any adverse interest to the Debtors' estates and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code.

A hearing on the matter is scheduled for 4:00 p.m. on Oct. 22, 2008, at the 5th floor of the U.S. Bankruptcy Court, 824 Market St., Courtroom #5 in Wilmington, Delaware. Objections, if any, are due by Oct. 15, 2008.

Based in Myrtle Beach, South Carolina, HRP Myrtle Beach Holdings, LLC -- owns and operates Hard Rock Park, a rock-n-roll theme park in Myrtle Beach, South Carolina, under a long-term license agreement with Hard Rock Cafe International (USA), Inc. The company and six of its affiliates filed for Chapter 11protection on Sept. 24, 2008 (Bankr. D. Del. Lead Case No.08-12193). Steven Goodwin will serve as the Debtors' chief executive officer. The U.S. Trustee for Region 3 has not appointed creditors to serve on an Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed assets and debts of between $100 million and $500 million each.

HRP MYRTLE: Wants to Hire RAS Management as Restructuring Advisor-----------------------------------------------------------------HRP Myrtle Beach Holdings LLC and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to retain RAS Mangement Advisors LLC to provide crisis management services to the Debtors and to employ Paul E. Gricus as chief restructuring officer of the Debtors.

b) review all financial information prepared by the Debtors including, but not limited to, financial statements as of the bankruptcy filing, showing in detail all assets and liabilities, and priority and secured creditors;

c) perform financial analysis related to proposed asset sales, if any, including assistance in negotiations and attendance at hearings and testimony;

d) assist the Debtors in formation of a plan of reorganization;

e) analyze and make recommendations to the Debtors with respect to any offers it may receive from potential suitors;

f) attend meetings that may include, among others, an official committee of unsecured creditors, secured lenders, their attorneys and consultants and federal and state authorities, as necessary;

g) review the Debtors' periodic operating and cash flow statements;

h) review the Debtors' books and records for various transactions, including related party transactions, potential preferences, fraudulent conveyances, and other potential prepetition investigations;

i) undertake any investigations with respect to the Debtors' prepetition acts, conduct, property, liabilities, and financial condition, their management and creditors, including the operation of their business, and as appropriate, avoidance actions;

j) review any business plans prepared by the Debtors;

k) review and analyze proposed transactions for which the Debtors seek Court approval;

m) assist with the analyses and reconciliation of claims against the Debtors and bankruptcy avoidance actions;

n) assist the Debtors in neogtiating with their creditor constituencies, including negotiations relating to the Debtors' plan of reorganization;

o) perform a liquidation analysis of the Debtors for purposes of a plan of reorganization;

p) assist the Debtors' management with the bankruptcy process, including facilitating their communications with parties-in- interest, assist with creditor questions and requests for information, and provide guidance as to compliance with financial and other reporting requirements;

q) assist the Debtors in complying with the reporting requirements of the Office of the U.S. Trustee, Bankruptcy Code, Federal Rules of Bankruptcy Procedure, and the Local Rules for the U.S. Bankruptcy Court for the District of Delaware, including preparation of statements of financial affairs, schedules and monthly operating reports;

r) assist with the analyses and reconciliation of claims against the Debtors and bankruptcyavoidance actions; and

s) provide the Debtors with other and further crisis management services regarding the Debtors' operations, including valuation, securing postpetition financing, general restructuring and advice with respect to financial, business and economic issues, as may arise.

The Debtors will also reimburse RAS for its reasonable travel and other out-of-pocket expenses incurred in connection with the engagement.

To the best of the Debtors' knowledge, RAS does not hold any adverse interest to the Debtors' estates and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code.

A hearing on the matter is scheduled for 4:00 p.m. on Oct. 22, 2008, at the 5th floor of the U.S. Bankruptcy Court, 824 Market St., Courtroom #5 in Wilmington, Delaware. Objections due by Oct. 15, 2008.

About HRP Myrtle

Based in Myrtle Beach, South Carolina, HRP Myrtle Beach Holdings, LLC -- owns and operates Hard Rock Park, a rock-n-roll theme park in Myrtle Beach, South Carolina, under a long-term license agreement with Hard Rock Cafe International (USA), Inc. The company and six of its affiliates filed for Chapter 11protection on Sept. 24, 2008 (Bankr. D. Del. Lead Case No.08-12193). Steven Goodwin will serve as the Debtors' chief executive officer. The U.S. Trustee for Region 3 has not appointed creditors to serve on an Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed assets and debts of between $100 million and $500 million each.

Developing implications mean that S&P could raise, lower, or affirm the ratings, depending on future developments including the details of the financing plan.

"If the business or financial profile significantly improves following the acquisition, we could raise the ratings," said Standard & Poor's credit analyst Ket Gondha. "If, however, the debt burden increases as a result of the transaction, or if the new ownership has a negative impact on financial policies, we could lower the ratings."

S&P could affirm the ratings if the transaction results in substantially similar business and financial risk profiles.

Standard & Poor's will monitor developments related to the ownership change to determine the final impact on the rating. S&P expects to resolve the CreditWatch within 90 days.

With revenues of about $270 million, HydroChem offers industrial cleaning services, including high-pressure water cleaning, chemical cleaning, industrial vacuuming, tank cleaning, and related services to the petrochemical (about 50% of revenues), oil refining (about 25%), utilities (about 10%), and other process industries. It typically offers services as part of recurring maintenance programs. These services improve operating efficiency and extend the useful lives of equipment and facilities.

INTERNATIONAL LEASE: S&P Lifts Preferred Stock Rtng to BBB from B-----------------------------------------------------------------Standard & Poor's Ratings Services raised its ratings on preferred stock of International Lease Finance Corp. (ILFC; A-/Watch Dev/A-1) to 'BBB' from 'B', and revised the CreditWatch implications to developing from negative. All other ILFC ratings remain on CreditWatch with developing implications.

S&P had lowered its ratings on preferred stock of ILFC and of certain other units of ultimate parent American International Group Inc. (A-/Watch Neg/A-1) because of the U.S. Federal Reserve's Sept. 16, 2008, statement that the U.S. government would have the right to veto AIG's common and preferred dividends under the $85 billion credit line extended by the Federal Reserve Bank of New York to AIG. However, S&P now believes that it is unlikely that ILFC's preferred dividends would in fact be vetoed, though AIG has suspended its own common dividend. S&P believes that, to facilitate the planned sale of ILFC and realize maximum proceeds, AIG and the U.S. government would not find it in their interests to intervene to block preferred dividends that ILFC could otherwise pay from its own resources.

S&P's 'BBB' rating on the preferred stock, two notches below the 'A-' long-term corporate credit rating on ILFC, is consistent with a normal rating differential for investment-grade companies.

"Our 'A-' long-term corporate credit rating on ILFC reflects our current view of the company's credit quality, without consideration of any support from AIG," said Standard & Poor's credit analyst Philip Baggaley. "Our 'A-1' short-term corporate credit rating, by contrast, also factors in liquidity available indirectly from the federal credit line to AIG." S&P normally assigns an 'A-2' short-term rating to companies whose long-term corporate credit rating is 'A-'.

S&P reviews of the AIG credit line documentation and other information confirms that the assets of ILFC are not subject to a lien under the $85 billion AIG credit line, creating a claim senior to those of unsecured bondholders of ILFC. ILFC drew down its $6.5 billion of bank credit lines, and stated on Sept. 18, 2008, that it expected that those funds, "together with cash provided by operating activities will be sufficient to meet its debt obligations into the first quarter of 2009." S&P expects that ILFC will in fact have access to liquidity that will permit it to meet external obligations without recourse to the credit markets beyond that timeframe. ILFC's aircraft leasing business, which generated record profits in the second quarter of 2008, continues to perform well, although S&P expects that aircraft lease rates will weaken as the unfolding global economic slowdown and financial market turmoil hurts air travel and aircraft values.

Ratings are on CreditWatch with developing implications. When ILFC is sold, S&P will reevaluate the company's credit, including consideration of its new ownership, capitalization, and access to liquidity, to resolve the CreditWatch review.

In addition, S&P will take into account the outlook for aircraft leasing and the state of capital markets.

The downgrade is driven primarily by continued reduced capital availability in the commercial real estate debt capital markets and weakening commercial real estate fundamentals, which Fitch believes will negatively affect iStar's portfolio quality and cash flow. Fitch is concerned that declining asset quality may result in iStar recognizing additional provisions for loan losses and impairments, which would reduce the company's fixed charge coverage ratios.

Many of iStar's commercial real estate borrowers historically have refinanced their loans via the secured debt markets or have sold assets to repay the company's loans. The decreased ability of iStar's borrowers to repay loans or sell assets reduces the company's ability to meet future funding obligations and debt maturities. As a result, iStar may have to increase its borrowings or dispose of assets to address these uses of cash.

In addition, the continued slowdown in the single-family residential sector and a slowing economy also continue to impact the timing and amount of repayment of condominium construction loans assumed in connection with iStar's July 2007 acquisition of Fremont General Corporation's commercial real estate lending business and retained interest in Fremont's commercial real estate loan portfolio.

Offsetting these credit concerns is iStar's liquidity surplus, which should be adequate to address funding obligations and debt maturities through the end of 2009. In addition, iStar has a large and diversified unencumbered asset pool, which can serve as a source of contingent liquidity. That said, asset dispositions will likely be more challenging to consummate given current and anticipated market conditions.

The Negative Outlook is predicated on continued concern that the slowdown in the commercial real estate debt capital markets and moderating real estate fundamentals will have adverse effects on cash flows for the remainder of 2008 and 2009. If iStar can maintain adequate liquidity and access to capital to address future funding obligations and debt maturities, Fitch may revise iStar's Outlook to Stable. Consistent with its July 24, 2008 rating downgrade, Fitch will also look for iStar to maintain consolidated fixed charge coverage, as defined in iStar's senior notes indentures, above 1.7 times over the next twelve months.

Headquartered in New York City, iStar provides structured financing and corporate leasing of commercial real estate nationwide. iStar leverages its expertise in real estate, capital markets, and corporate finance to serve real estate investors and corporations with sophisticated financing requirements. As of June 30, 2008, iStar had $16.1 billion of undepreciated assets and $3.3 billion of undepreciated book equity.

JDA SOFTWARE: S&P Keeps 'B+' Corp. Credit Rating Under Neg. Watch-----------------------------------------------------------------Standard & Poor's Ratings Services announced that its ratings on JDA Software Group Inc., including the 'B+' corporate credit rating, remain on CreditWatch with positive implications. Ratings were placed on CreditWatch Aug. 11, 2008, following JDA's announcement that it was acquiring unrated Dallas, Texas-based I2 Technologies Inc. for an enterprise value of approximately $346 million in cash.

Upon completion of the transaction, S&P expects to raise JDA's corporate credit rating to 'BB-' with a stable outlook. At the same time, S&P expects to assign its 'BB+' issue-level rating and a recovery rating of '1' to the company's proposed $450 million of first-lien senior secured facilities, indicating that lenders can expect very high recovery in the event of a payment default. These expected ratings are based on preliminary offering statements, subject to review upon final documentation.

"The potential upgrade reflects our expectation that the acquisition will provide additional scale and should help JDA realize cost synergies through higher utilization and rationalization of the combined sales, product development, and service organizations," said Standard & Poor's credit analyst Joseph Spence. "We had previously anticipated a leveraging acquisition and had indicated rating upside potential if the company were to subsequently maintain leverage below 4x operating lease-adjusted EBITDA, as would be the case with the i2 transaction."

The projected 'BB-' rating reflects JDA's second-tier presence in a highly competitive and consolidating industry, its niche product offerings, and the risks associated with the integration of its i2 Technologies Inc. acquisition, and high leverage. These characteristics are only partially offset by the company's significant base of recurring revenues and high customer switching costs.

JDA is a leading provider of software applications in the retail, transportation, and process manufacturing verticals, offering a suite of products, specializing in enterprise resource planning, supply and demand chain optimization, and analytics.

The i2 acquisition will expand JDA's customer base and product capabilities into the discrete manufacturing market. Pro forma revenues are about $630 million (versus an actual $378 million for the trailing-12-month period ended June 30, 2008), with recurring annual service and subscription fees comprising about $300 million of that amount. To finance the transaction, JDA received commitments for up to $450 million of debt financing, including $425 million in term loans and a $25 million revolving credit facility.

Although pro forma total operating lease-adjusted debt to EBITDA will rise to the 4.0x area from 1.5x, the acquisition provides additional scale and should help JDA realize cost synergies through higher utilization and rationalization of the combined sales, product development, and service organizations. In addition, S&P expects acquisitions to be modest over the near term, as JDA's focus will be on integrating i2 operations and reducing acquisition-related debt. The current rating incorporates S&P's assumption that total operating lease-adjusted debt to EBITDA will not exceed 4.0x over the intermediate term, including debt incurred for opportunistic acquisitions.

Standard & Poor's will monitor the transaction and revise its ratings accordingly if the deal closes as expected.

KIMBALL HILL: Court OKs Sale of Arlington Texas Mineral Estate--------------------------------------------------------------The United States Bankruptcy Court for the Northern District of Illinois approved the bidding procedures related to Kimball Hill Inc. and its debtor-affiliates' proposed sale of their mineral estate in Arlington, Texas.

Judge Susan Pierson Sonderby directed the Debtors to provide to the Official Committee of Unsecured Creditors and Prepetition Lenders' Agent a list of the parties who they believe may potentially be interested in, and who they believe to be financially capable of consummating an asset purchase agreement on the Mineral Estate.

The Debtors are to consult with the Creditors Committee and the Prepetition Agent during the bid evaluation process, including in connection with selecting which bids will be accepted and which bid will be deemed the Successful Bid.

The Debtors may seek approval of the sale agreement with the successful bidder at the Oct. 14, 2008, omnibus hearing. Any objection to the Agreement must be filed and served on the Notice Parties by October 10.

About Kimball Hill

headquartered in Rolling Meadow, Illinois, Kimball Hill Inc. --http://www.kimballhillhomes.com/-- is one of the largest privately-owned homebuilders and one of the 30 largesthomebuilders in the United States, as measured by home deliveriesand revenues. The company designs, builds and markets single-family detached, single-family attached and multi-family homes.The company currently operate within 12 markets, including, amongothers, Chicago, Dallas, Fort Worth, Houston, Las Vegas,Sacramento and Tampa, in five regions: Florida, the Midwest,Nevada, the Pacific Coast and Texas.

LAKETOWN WHARF: Wants to Access $10.3 Million Corus DIP Facility----------------------------------------------------------------Laketown Wharf Marketing Corporation aka LWMC, Inc. asks the Hon.Lewis M. Killian, Jr., of the United States Bankruptcy Court forthe Northern District of Florida for authority to obtain, on theinterim, up to $7,840,000 in postpetition financing from CorusBank, N.A., who owns 100% of the issued and outstanding stock ofthe Debtor.

The Debtor also seeks permission to access as much as $10,366,000 in financing from the lender, on a final basis, before Nov. 30, 2008.

A hearing is set for Oct. 14, 2008, at 10:30 a.m., to considerapproval of the Debtor's request. The hearing will take place at110 E. Park Avenue, 2nd floor Court room in Tallahassee. Thehearing was originally scheduled on Oct. 7, 2008.

The Debtor tells the Court that it has an immediate need to borrowmoney to complete construction of a luxury condominium complexlocated at 9902 South Thomas Drive (aka the project), preserve itsvalue pending the sale of the condo and commercial units, andcontinue operations as a going concern as it reorganize. TheDebtor says that it acquired the project from Laketown Wharf LLCon Sept. 12, 2008, by execution of a deed in lieu of foreclosure.

In April 2005, Corus Bank and Laketown Wharf LLC entered into aconstruction loan agreement, wherein Corus Bank agreed to provideas much as $146,300,000 for construction, development andmarketing of the project. As of the Debtor's bankruptcy filing,the outstanding amount of principal and interest under the loan is$130,000,000.

Furthermore, Laketown Funding LLC agreed to make a mezzanine loanof up to $43,000,000 to Laketown Wharf LLC, which was secured by,among other things: (a) a subordinate pledge of the membershipinterest of Laketown Wharf LLC; (b) subordinate pledge of thestock of Laketown Inc.; and (c) a subordinate mortgage lien on theproject. As of the Debtor's bankruptcy filing the aggregateoutstanding amount of principal and interest under the mezzanineloan is $60,000,000.

On April 11, 2007, Laketown Wharf LLC entered into a change orderand settlement agreement with Walton Construction Company LLC,under which Laketown Wharf LLC delivered $9,000,000 junior noteto Walton Construction, secured by a mortgage upon the project.

Laketown Wharf LLC defaulted after it can no longer (i) paymonthly installments of interest due; (ii) keep the loans inbalance; (iii) and complete construction of the project onJuly 13, 2007. Accordingly, Laketown Wharf LLC entered into aforbearance agreement including a delivery of deed in lieudocuments for the project in escrow with Corus Bank. LaketownWharf LLC defaulted under the terms of that agreement Sept. 11,2008.

Consequently, Laketown Wharf LLC transfered all right, title andinterest in the project to the Debtor. The Debtor, then, assumedthe obligations of Laketown Wharf LLC owed to Corus Bank.

According to the Deal's Caroly Okomo, affiliate Laketown FundingLLC and Walton Construction Co. LLC -- both secured prepetitionlenders of the Debtor -- objected to the Debtor's request. Theaffiliates argued that the Debtor is seeking approval of acontrolling agreement that no parties in interest have beengiven chance to review, She says.

The loans will incur interest at 9% per annum, and will increaseto $12% per annum in the event of default. The loans will matureon the earliest of (i) Dec. 31, 2008, or (ii) date of accelerationof the secured obligations upon the occurrence of an event ofdefault.

To secure its DIP obligations, the Debtor will grant to the lendera superpriority administrative expense claims over any and alladministrative expenses.

At the same time, S&P raised the issue-level rating on Land O'Lakes' senior secured revolving credit facility and secured second-lien notes to 'BBB' from 'BBB-'. In addition, the '1' recovery rating, indicating expectations of very high recovery of principal and pre-petition interest in the event of a payment default, remains unchanged. At the same time, S&P raised the issue-level ratings on Land O'Lakes' senior unsecured debt issue to 'BB+' from 'BB' and the '3' recovery rating, indicating expectations of meaningful recovery of principal and pre-petition interest in the event of a payment default, remains unchanged.

Standard & Poor's removed all of the issue-level ratings from CreditWatch with positive implications, where it had placed them on July 30, 2008, following Land O'Lakes' continued improvement in operating results and credit measures. Land O'Lakes had rated debt (adjusted for capitalized operating leases, pension and postretirement benefit obligations, and accounts receivable securitization) of about $783.4 million as of June 30, 2008.

The rating on Land O'Lakes reflects the inherent cyclical nature and seasonality of many of the cooperative's agricultural-based businesses and low margins. The strength of many of the cooperative's brands, diverse product line, geographic coverage, its improved financial profile with modest near-term debt maturities, and an experienced management team somewhat offset these factors.

The stable outlook on Land O'Lakes reflects Standard & Poor's expectations that it will maintain its market positions and continue to pursue its current growth strategy. S&P expects the company will maintain credit protection measures that are stronger than the median, including total debt to EBITDA between 2.5x and 3x, to offset the low margins of many of its businesses.

"We could revise the outlook to positive if the company maintains credit protection measures that are much stronger than the rating category, as well as successfully weathering the inherent volatility in the sector," noted Standard & Poor's credit analyst Jayne Ross. "We could revise the outlook to negative or lower the rating if agricultural-based operating conditions deteriorate enough to result in more than a 50% decline in EBITDA that could then cause a breach of the company's covenants," she continued.

LANDRY'S RESTAURANT: S&P Keeps Neg. Watch on Jeopardized Financing------------------------------------------------------------------Standard & Poor's Ratings Services said that its ratings on the Houston-based Landry's Restaurant Inc., including the 'B' corporate credit rating, remain on CreditWatch with negative implications, where they were placed on Jan. 28, 2008. The ratings on Landry's unrestricted subsidiary, Las Vegas-based Golden Nugget Inc. also remain on CreditWatch with negative implications.

This follows the company's announcement that the CEO, Chairman, and President Tilman J. Fertitta has informed the company's Special Committee of its Board of Directors that the debt financing necessary to complete his offer to acquire the company at $21.00 a share is in jeopardy. Mr. Fertitta also advised that he is negotiating with Jefferies and Co. about financing a transaction at a substantially lower price.

Even if a deal is not consummated, Landry's will have to access the capital markets in the near future to refinance its $400 million of unsecured notes, which effectively mature March 1, 2009. "Based on this and Mr. Fertitta's 39% ownership of the company, we still expect that Mr. Fertitta will attempt to obtain the financing to refinance that debt and purchase the company," said Standard & Poor's credit analyst Charles Pinson-Rose.

LB-UBS COMMERCIAL: S&P Lowers Ratings on Two Classes of Certs.--------------------------------------------------------------Standard & Poor's Ratings Services lowered its ratings on two classes of commercial mortgage pass-through certificates from LB-UBS Commercial Mortgage Trust 2007-C1. Concurrently, S&P affirmed its ratings on 24 classes from this series. In addition, S&P affirmed its ratings on four classes of commercial mortgage pass-through certificates from Four Times Square Trust's series 2006-4TS.

The downgrades of the LB-UBS certificates reflect credit concerns with several loans in the pool. The credit concerns are:

-- Two of the 18 loans in the pool ($20.5 million, 0.5%) have reported debt service coverage of less than 1.0x;

-- Two interest-only loans ($14.7 million, 0.4%) will have a DSC of less than 1.0x when their amortization period begins; and

-- One loan totaling $4.6 million (0.1%) was transferred to the special servicer, Midland Loan Services Inc.

The affirmations of the ratings from LB-UBS reflect credit enhancement levels that provide adequate support through various stress scenarios.

The affirmations of the ratings from Four Times Square Trust's series 2006-4TS reflect the stable operating performance of the collateral property. The certificates from this deal derive 100% of their cash flow from a loan secured by the Four Times Square Building in Times Square in Manhattan.

There are 18 loans in the pool totaling $465.0 million (12.5%) with a reported DSC of less than 1.0x, two of which are credit concerns. The 18 loans are secured by a variety of property types and have an average balance of $25.8 million. These loans have experienced an average decline in DSC of 40% since issuance. Most of the loans are backed by properties that are in various stages of renovation or lease-up, and S&P expects the net cash flow available for debt service to improve in the future. The two loans that are credit concerns are secured by one multifamily property and one office property. Both properties experienced a combination of higher operating expenses and lower occupancy.

The larger of the two loans, Verona Woods ($19.25 million, 0.5%), is secured by a 196-unit multifamily property in West Covina, California, and had a DSC of 0.51x as of December 2007. S&P attributes the low DSC to increased expenses due to the property's lease-up. Despite an occupancy increase to 89.3% in June 2008 from 69.9% in December 2007, Standard & Poor's is still concerned with the low DSC.

One asset, the Lubbock Square Apartment loan ($4.6 million, 0.1%), is with the special servicer; details are:

-- The Lubbock Square Apartment loan has a total exposure of $4.6 million (0.1%). The loan is secured by a 124-unit multifamily property in Lubbock, Texas, and was transferred to Midland on Oct. 29, 2007. The loan is 90-days-plus delinquent due to the property's involvement in a lawsuit.

Midland moved to intervene in the lawsuit and requested a lift-of-stay be granted on the property. The court denied the request on June 17, 2008. Midland is filing a response to the denial. Standard & Poor's will monitor the situation as further information becomes available. An appraisal reduction amount, totaling $1.1 million, is in effect for this loan.

As of the Sept. 15, 2008, remittance report, the collateral pool consisted of 146 loans with an aggregate trust balance of $3.734 billion, down slightly from $3.735 at issuance. The master servicer, KeyCorp Real Estate Capital Markets Inc., reported financial information for 98.2% of the pool. Eighty-nine percent of the servicer-provided information was full-year 2007 data. Standard & Poor's calculated a weighted average DSC of 1.41x for the pool, down from 1.43x at issuance. There is one delinquent loan in the pool that is with the special servicer and was discussed above. The trust has experienced no losses to date.

The top 10 loans have an aggregate outstanding balance of $2.06 billion (56%) and a weighted average DSC of 1.30x, down from 1.45x at issuance. S&P attributes the decline in DSC to stabilized cash flows considered in the NCF amount at issuance, which has not been achieved for five of the top 10 loans (49.6% of the top 10 loans). The ninth-largest loan appears on the watchlist. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 exposures. All of the properties were characterized as "good" or "excellent."

The credit characteristics of the International Square (7.2%), Tishman Speyer DC Portfolio (5.8%), Extendicare Portfolio (3.6%), Four Times Square (2.0%), and Kentucky Oaks Mall (0.8%) loans continue to be consistent with those of investment-grade rated obligations. The credit characteristics of the Westfield San Francisco Emporium loan (8.0%) are no longer consistent with those of an investment-grade rated obligation.

Details of the four largest loans consistent with investment-grade obligations as well as the Westfield San Francisco loan are:

-- The International Square loan, the fourth-largest exposure in the pool, has a trust balance of $270.0 million. The loan is secured by a 1,027,338-sq.-ft. office building in Washington, D.C. Reported DSC was 1.44x as of June 30, 2008. Occupancy was 94.8% as of June 30, 2008, compared with 86.3% occupancy at issuance. Standard & Poor's adjusted value for this loan is comparable to its level at issuance.

-- The Tishman Speyer DC Portfolio loan is the fifth-largest exposure in the pool and has a trust balance of $217.0 million. The loan is secured by a 940,079-sq.-ft. office building in various locations including Washington, D.C., and Virginia. Reported DSC was 1.46x as of year-end 2007. Occupancy was 86.0% as of June 30 2008, compared with 84.1% at issuance. Standard & Poor's adjusted value for this loan is comparable to its level at issuance.

-- The Extendicare Portfolio loan, the seventh-largest exposure in the pool, has a trust balance of $125.0 million and a whole-loan balance of $500.0 million. The loan is secured by an 8,492-bed health care portfolio located in various locations around the country. Reported DSC was 2.35x as of year-end 2007. Occupancy was 91.5% as of June 30, 2008, compared with 94.0% occupancy at issuance. Standard & Poor's adjusted value for this loan is comparable to its level at issuance.

-- The Four Times Square property is encumbered by a $639 million whole loan. The whole loan comprises a $588.9 million A participation that was split into two pari passu pieces: an A-1 note totaling $72.9 million, which is included in the LB-UBS 2007-C1 trust, and an A-2 note totaling $516 million, which is included in the Four Times Square Trust series 2006-4TS transaction. The whole loan is further participated into a $25.9 million B note and a $24.1 million C note that are also included in the Four Times Square Trust. The A-2, B, and C notes, totaling $566.1 million, provide 100% of the cash flow to the certificates in the Four Times Square Trust series 2006-4TS transaction. The loan is secured by a 1.7 million-sq.-ft. class A office building in midtown Manhattan. Reported DSC was 1.69x as of year-end 2007. Occupancy was 99.7%, compared with 99.8% occupancy at issuance. Standard & Poor's adjusted value for this loan is comparable to its level at issuance.

-- The Westfield San Francisco Emporium loan, the third- largest exposure in the pool, has a trust balance of $300.0 million (8%) and a whole-loan balance of $435 million. The loan is secured by 609,200 sq. ft. of a 966,442-sq.-ft. retail property, in San Francisco, California. The collateral also includes 246,099 sq. ft. of class A office space. Reported DSC was 1.36x as of Dec. 31, 2007. Occupancy was 91.0% as of June 30, 2008, compared with 93.4% occupancy at issuance. Occupancy for the in-line retail space was 88.4% as of June 30, 2008, down from 93% at issuance. Standard & Poor's adjusted NCF for this loan is down 9.1% from its level at issuance due to a decline in occupancy of in-line retail tenants and base rent.

KeyBank reported a watchlist of 10 loans ($267.4 million, 7.2%). The Bethany Houston Portfolio loan ($102.3 million, 2.7%) is the largest loan on the watchlist and the ninth-largest exposure in the pool. The loan is secured by an eight multifamily portfolio containing 2,493 units primarily in Houston, Texas. The loan appears on the watchlist because it had a DSC of 0.88x as of Dec. 31, 2007. The property had a DSC of 1.02x and 84.8% occupancy as of June 30, 2008.

Standard & Poor's identified seven collateral properties ($142.8 million; 3.8%) in areas affected by Hurricane Ike. One of the properties is held within the Bethany Houston Portfolio ($102.8 million; 2.7%) and had an allocated appraisal amount of $24.9 million at issuance. The master servicer could not confirm if three properties ($18.6 million; 0.5%) were damaged. The remaining properties either did not sustain any damage or sustained minor damage that is already under repair. Standard & Poor's will continue to evaluate these loans and review information as it becomes available.

Standard & Poor's stressed the loans on the watchlist and the other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the lowered and affirmed ratings.

Four Times Square Trust Commercial mortgage-pass through certificates, series 2006-4TS

Class Rating----- ------A AAA B AA+ C AA X AAA

LEHMAN ABS: Fitch Keeps 'CC/DR3' Ratings on Two Classes of Certs.-----------------------------------------------------------------Fitch Ratings has taken rating actions on Lehman ABS manufactured housing-backed certificates. The classes represent a beneficial ownership interest in separate trust funds, which include bonds that have been affirmed.

The ratings on LBDP reflect S&P's view regarding: -- The decision by LBDP's board of directors to declare a voluntary bankruptcy; and

-- The uncertainty surrounding the termination process that began for LBDP on Sept. 16, 2008. Based on the information S&P has received, all of LBDP's swaps have been terminated and are in the process of being settled. According to the process set forth in its operating guidelines, LBDP is scheduled to pay out-of-the-money swap payables to its counterparties on Oct. 7, 2008. At this time, the impact of LBDP's voluntary bankruptcy filing on this process is uncertain.

S&P notes that both LBDP's and LBFP's capital position remained positive after Lehman Brothers Holdings Inc. filed for bankruptcy on Sept. 15, 2008. As it previously mentioned, LBDP reported to us a positive close-out amount of approximately $80 million upon the termination of its swaps. In addition, LBFP reported to us that its mark-to-market position as of Oct. 2, 2008, showed a positive mark of approximately $195 million on an aggregate basis against its counterparties. Furthermore, LBFP reported $125 million of equity capital and LBDP reported $200 million of equity capital, both of which support its counterparty exposures.

LEVITT & SONS: Seeks Until Jan. 31, 2009 to File Chapter 11 Plan----------------------------------------------------------------Levitt and Sons LLC, and its debtor-affiliates ask the UnitedStates Bankruptcy Court for the Southern District of Florida tofurther extend the period during which they have the exclusiveright to solicit acceptances to their Joint Liquidating Chapter 11Plan and Disclosure Statement through January 31, 2009.

-- a continued status conference on the Disclosure Statement is set for mid-October;

-- a hearing on the adequacy of the Disclosure Statement has not been reset; and

-- the Debtors and the Official Committee of Unsecured Creditors intend to file an amended Plan and Disclosure Statement.

The Court has recently set a continued status conference on the Disclosure Statement on October 14, 2008.

Mr. Guso asserts that cause exists for the Debtors' request for these reasons:

a. The Debtors' Chapter 11 cases are large and complex.

b. The Debtors have made good faith progress towards an orderly wind-down of their operations. Certain of the Debtors have been involved in an orderly disposition of their tangible assets. The Debtors who are obligors to Wachovia Bank, N.A., have obtained postpetition financing to restart selective sale and construction activities under the supervision of their chief administrator.

c. The Debtors are generally paying their postpetition debts as they come due.

d. The Debtors are in compliance with all of the operating guidelines of the United States Trustee.

e. The Debtors have filed their Plan and intend to file an amended Plan and Disclosure Statement, in conjunction with the Committee, soon.

f. The Debtors are continuing negotiations with their creditors.

g. The Debtors' Chapter 11 cases have been pending for approximately 11 months.

About Levitt and Sons

Based in Fort Lauderdale, Florida, Levitt and Sons LLC --http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. --http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estatedevelopment company in the southeastern United States. Thecompany operates in two divisions, homebuilding and land. Thehomebuilding division primarily develops single and multi-familyhomes for adults and families in Florida, Georgia, Tennessee, andSouth Carolina. The land division engages in the development ofmaster-planned communities in Florida and South Carolina.

Approximately $2.5 billion of total debt is affected by Fitch's action, including an undrawn $500 million revolving credit facility. The Rating Outlook is revised to Negative from Stable.

The Negative Outlook reflects Fitch's expectations for a greater-than-normal contraction of average selling prices and gross margin pressure, due to:

-- The deteriorating worldwide information technology spending outlook for consumers and enterprises given the increasingly challenging macroeconomic environment. In addition to moderating HDD unit growth, Fitch believes the economic downturn increases the risk of a supply and demand imbalance in the HDD industry that has historically led to periods of significant ASP erosion.

-- The high degree of product commonality expected across the HDD industry in calendar 2008, which has also historically led to periods of greater price erosion.

-- Potential for debt-financed shareholder repurchases or acquisitions, mitigated by an indebtedness covenant in Seagate's credit facility that restricts additional indebtedness to 10% of consolidated total assets, or approximately $1 billion, as of June 27, 2008, plus borrowings under the $500 million facility.

-- Long-term threat of technology substitution from NAND flash- based solid state drives. Fitch believes broad market adoption of flash-based SSD requires further significant declines in the per gigabit cost, availability of storage capacities on par with HDDs and actual delivery of stated performance benefits, which have thus far disappointed early adopters of high-end notebooks with SSD.

-- Potential gross margin pressure as Seagate's HDD unit mix for personal computers gradually shifts to lower-margin notebooks at the expense of desktops, where the company is the industry leader. Fitch believes notebook HDDs carry lower gross margins due to the greater number of competitors than in the desktop market.

Total liquidity as of June 27, 2008 was approximately $1.5 billion, consisting of $1.1 billion of cash and $438 million of availability, net letters of credit, under an undrawn $500 million revolving line of credit. The facility matures in Sept. 2011 and requires Seagate to maintain minimum liquidity and fixed charge coverage of $500 million and 1.5 times, respectively, and maximum net leverage of 1.5x. Furthermore, liquidity is supported by annual free cash flow that averaged nearly $504 million from fiscal year 2006 to 2008.

Seagate's interest coverage increased to approximately 19x in the latest 12 months ended June 27, 2008 from 14x in the year-ago period due to a four percentage point improvement in EBITDA margin and nearly 12% revenue growth. Leverage improved to 0.8x as of June 27, 2008 from 1.2x in the prior year due strong EBITDA growth and flat debt balances. However, Fitch believes credit protection measures are likely to deteriorate in fiscal year 2009 due to profitability pressures.

As of June 27, 2008, Seagate's total debt was approximately $2 billon, consisting of:

-- $300 million of floating rate senior notes due Oct. 2009; -- $136 million of 6.8% convertible senior notes due 2010; -- $600 million of 6.375% senior notes due Oct. 2011; -- $326 million of 2.375% convertible senior notes due 2012; -- $45 million of 5.75% subordinated debentures due 2012; -- $600 million of 6.8% senior notes due Oct. 2016; and -- $30 million drawn from a Bank of China credit line.

MAXTOR CORP: Fitch Holds 'BB' Rating on Subordinated Debentures---------------------------------------------------------------Fitch Ratings has affirmed the ratings of Seagate Technology and its wholly owned subsidiaries, Seagate Technology HDD Holdings and Maxtor Corporation, the debt of which is irrevocably fully and unconditionally guaranteed by Seagate, as:

Approximately $2.5 billion of total debt is affected by Fitch's action, including an undrawn $500 million revolving credit facility. The Rating Outlook is revised to Negative from Stable.

The Negative Outlook reflects Fitch's expectations for a greater-than-normal contraction of average selling prices and gross margin pressure, due to:

-- The deteriorating worldwide information technology spending outlook for consumers and enterprises given the increasingly challenging macroeconomic environment. In addition to moderating HDD unit growth, Fitch believes the economic downturn increases the risk of a supply and demand imbalance in the HDD industry that has historically led to periods of significant ASP erosion.

-- The high degree of product commonality expected across the HDD industry in calendar 2008, which has also historically led to periods of greater price erosion.

-- Potential for debt-financed shareholder repurchases or acquisitions, mitigated by an indebtedness covenant in Seagate's credit facility that restricts additional indebtedness to 10% of consolidated total assets, or approximately $1 billion, as of June 27, 2008, plus borrowings under the $500 million facility.

-- Long-term threat of technology substitution from NAND flash- based solid state drives. Fitch believes broad market adoption of flash-based SSD requires further significant declines in the per gigabit cost, availability of storage capacities on par with HDDs and actual delivery of stated performance benefits, which have thus far disappointed early adopters of high-end notebooks with SSD.

-- Potential gross margin pressure as Seagate's HDD unit mix for personal computers gradually shifts to lower-margin notebooks at the expense of desktops, where the company is the industry leader. Fitch believes notebook HDDs carry lower gross margins due to the greater number of competitors than in the desktop market.

Total liquidity as of June 27, 2008 was approximately $1.5 billion, consisting of $1.1 billion of cash and $438 million of availability, net letters of credit, under an undrawn $500 million revolving line of credit. The facility matures in Sept. 2011 and requires Seagate to maintain minimum liquidity and fixed charge coverage of $500 million and 1.5 times, respectively, and maximum net leverage of 1.5x. Furthermore, liquidity is supported by annual free cash flow that averaged nearly $504 million from fiscal year 2006 to 2008.

Seagate's interest coverage increased to approximately 19x in the latest 12 months ended June 27, 2008 from 14x in the year-ago period due to a four percentage point improvement in EBITDA margin and nearly 12% revenue growth. Leverage improved to 0.8x as of June 27, 2008 from 1.2x in the prior year due strong EBITDA growth and flat debt balances. However, Fitch believes credit protection measures are likely to deteriorate in fiscal year 2009 due to profitability pressures.

As of June 27, 2008, Seagate's total debt was approximately $2 billon, consisting of:

-- $300 million of floating rate senior notes due Oct. 2009; -- $136 million of 6.8% convertible senior notes due 2010; -- $600 million of 6.375% senior notes due Oct. 2011; -- $326 million of 2.375% convertible senior notes due 2012; -- $45 million of 5.75% subordinated debentures due 2012; -- $600 million of 6.8% senior notes due Oct. 2016; and -- $30 million drawn from a Bank of China credit line.

The CreditWatch placements follow its preliminary analysis of the transaction, including the specially serviced assets and the loans with low debt service coverage. Details of S&P's analysis are:

-- Four loans ($32.8 million) are with the special servicer, CWCapital Asset Management LLC. CWCapital is in the process of foreclosing on three ($30.3 million) of the four loans; and

-- Standard & Poor's has credit concerns with seven ($45.5 million) of the 18 loans ($128.8 million) with reported DSC of less than 1.0x. On average, the 18 loans have experienced a weighted average decline in DSC of 41% since issuance.

Standard & Poor's will resolve the CreditWatch placements on the completion of its analysis, which S&P expects to be in one to two weeks.

MID OCEAN: S&P Cuts Class A1-L Notes Rating to 'B+' from 'BB'-------------------------------------------------------------Standard & Poor's Ratings Services lowered its rating on the class A1-L notes issued by Mid Ocean CBO 2000-1 Ltd., a collateralized debt obligation transaction backed by asset-backed securities and other structured securities and managed by Deerfield Capital Management LLC. S&P lowered the rating on the notes primarily because of negative migration in the credit quality of the underlying collateral since the last rating action in December 2006. At the same time, S&P affirmed its 'BBB' rating on the notes from Restructured Asset Certificates With Enhanced Returns Series 2007-2-E Certificates. This transaction is a retranche of the class A-1L notes from Mid Ocean CBO 2000-1 and the class A1 notes from Mid Ocean CBO 2001-1.

Based on the Sept. 2, 2008, trustee report, 57.35% ($80.49 million) of the total securities in the underlying collateral pool have speculative-grade ratings, up from 42.84% in December 2006. Although the class A1-L notes continue to benefit from paydowns due to the failure of the class A coverage test (the balance has been paid down to 41.78%), the deterioration in the credit quality of the underlying assets does not support the previous 'BB' rating on the notes.

Fitch does not rate the $10.4 million class M, the $2.6 million class N, the $3.9 million class O, or the $10.4 million class P.

The rating affirmations reflect minimal paydown since issuance and stable performance of the pool. As of the September 2008 distribution date, the transaction has paid down by 0.28% to $1.037 billion from $1.039 billion at issuance.

There have been no specially serviced loans since issuance. Fitch has identified three loans (17.6%) as Loans of Concern. The largest Fitch Loan of Concern (7.8%) is secured by a retail property in Atlantic City, New Jersey which is in the process of stabilization. An updated occupancy figure was not available and the property's income and occupancy are both lower than budgeted. Some tenants have minimum rent based off of a percentage of sales and other tenants have co-tenancy requirements that allow them to pay lower rent if occupancy is below a certain level.

The second largest Loan of Concern (7.6%) is secured by an office property in New York. The property was 66% occupied as of June 2008, and a significant share of the property's revenue came from the sponsor's master lease and rent payments as a tenant.

There were two additional loans at issuance, Logan Town Center (7.3%) and Two Buckhead Plaza (5.0%), that were in the process of stabilizing. Fitch has reviewed the updated occupancy and cash flow information for these loans and has determined that they were in-line with the stabilization schedule set forth at issuance.

There are two shadow rated loans within the transaction: 42nd Street Retail (7.6%) and Vinings Jubilee (0.5%). Occupancy as of year end 2007 for 42nd Street Retail and Vinings were 94.5% and 100%, respectively, consistent with issuance. Both of the loans maintain investment grade shadow ratings.

The affirmations are due to the pool's stable performance and limited paydown since issuance. As of the September 2008 distribution date, the pool's aggregate principal balance has decreased approximately 1% to $1.54 billion from $1.55 billion at issuance. There have been no specially serviced or delinquent loans since issuance. Year-end 2007 financials were collected for 99.9% of the pool and Fitch identified nine loans of concern (2.7%).

The largest loan in the transaction (6.2%) is secured by a 443,251 sf retail development located in Mount Pleasant, SC. The property is anchored by Barnes & Noble, Bed Bath & Beyond, Belk, and Consolidated Theaters. Major tenants include Old Navy, Earth Fare, Tweeter. The property has maintained an occupancy of greater than 95% since 2001, and is currently 96% occupied as of March 31, 2008. The debt service coverage ratio has improved to 1.29 times from 1.22 at issuance.

There are two loans (2.8%) in the transaction that are shadow rated investment grade. The London NYC Hotel Land Interest (1.8%) is collateralized by the ground leased to the London NYC Hotel, a 505-room tower located in Manhattan's Midtown submarket . Cash flow supporting the loan is received directly from the ground lease payment on a long term lease through year 2136.

The second shadow rated loan, Huron Estates (1%), is secured by an 806-unit manufactured hosing community in Romulus, Michigan. As of mid-year, 2008, the property is performing in-line with expectations at issuance. Occupancy as of June 2008 is 98%, a slight improvement from issuance (96%). The DSCR has improved to 2.13 times from 1.97 at issuance.

NSG HOLDINGS: Fitch Affirms Rating on $286MM Term Loan at 'BB'--------------------------------------------------------------Standard & Poor's Ratings Services said that on Oct. 7 it affirmed its 'BB' ratings on NSG Holdings LLC's $286 million senior secured term loan facility maturing 2014, $32.5 million senior secured synthetic LOC facility maturing 2014, and $514 million senior secured notes due 2025. The recovery rating of '3' for the term loan facility, the synthetic LOC facility, and the notes is unchanged. The outlook is stable.

NSGH is a wholly owned subsidiary of Northern Star Generation LLC, which owns or has beneficial interest in 12 electric generation facilities having a combined capacity of about 2,100 MW (gross) or about 1,451 MW (net). The facilities are located in five states, 10 of the assets are qualifying facilities, and two operate as exempt wholesale generators. All but one of the assets currently have power-purchase agreements or tolling agreements that expire from 2009 through 2025. Northern Star is jointly owned by UBS Northern "C" LLC a wholly owned, indirect subsidiary of UBS International Infrastructure Fund and OTPPB US Power LLC, a subsidiary of the Ontario Teachers' Pension Plan Board.

The predictable cash flow from NSGH's project portfolio supports a stable outlook. Standard & Poor's views the cash flow predictability as a key rating factor. S&P could lower the rating or revise the outlook if any of the large projects experience a sustained operating issue that precludes payments under the PPAs or tolling agreements. Over the next year, there is little room for an upgrade, given the portfolio's contracted and expected stable performance.

OFFICE DEPOT: S&P Cuts Corp. Credit Rating to 'BB' from 'BB+'-------------------------------------------------------------Standard & Poor's Ratings Services lowered its corporate credit rating on Delray Beach, Florida-based Office Depot Inc. to 'BB' from 'BB+'. S&P also lowered the ratings on the company's $400 million of senior unsecured notes due 2013 to 'BB-' from 'BB+' and changed the recovery rating on these notes to '5' from '4', indicating the expectation for modest (10%-30%) recovery in the event of a payment default.

S&P have withdrawn the bank loan and recovery ratings on the company's previous senior unsecured $1 billion multicurrency revolving credit facility due 2012 and this facility was replaced by a new $1.25 billion asset-based revolving credit facility due 2013 (unrated). S&P removed all debt ratings from CreditWatch with negative implications, where they were placed on July 8, 2008, following continued erosion of sales and earnings in the first half of 2008. The outlook is negative.

"The downgrade is based on the continued decline in operating performance in both the North American Retail and Business Solutions segments," explained Standard & Poor's credit analyst Mark Salierno, "and expectations that worsening economic trends will continue to pressure performance for the remainder of fiscal 2008 and into fiscal 2009."

OLSSON ENTERPRISES: Asks Court to Convert Case to Chapter 7-----------------------------------------------------------Olsson Enterprises, Inc., also known as Olsson's Books & Records, Record & Tape Ltd., and Olsson's Books, has asked the U.S. Bankruptcy Court for the District of Maryland to convert its Chapter 11 case to a Chapter 7 liquidation, Mediabistro.com, the Web Site for media professionals, reported last week.

The company said it has closed all of its locations and blamed its financial troubles to "stagnant sales, low cash reserves, and an inability to renegotiate current leases, along with a continuing weak retail economy and plummeting music sales".

The Publishers Weekly reported on July 10, 2008, that nearly a month after three publishers filed a petition with the Court to force Olsson's Books and Records into Chapter 7, Olsson's requested the Court that it be allowed to convert its Chapter 7 to a Chapter 11 in order that it may continue to operate while it attempts to restructure under Chapter 11. Olsson's refuted the claim of the three publishers that it had not been paying its debts as they fell due.

On July 15, 2008, the company "officially" filed for Chapter 11 protection, saying it was forced to seek bankruptcy "because of the weak retail economy, rising rents and taxes, increased competition and an accelerated drop in music CDs," the Publishers Weekly reported on July 16.

According to Mediabistro.com, the Washington, D.C.-based Olsson's Enterprises, Inc., which was established in 1972, is a retailer of books, music CDs, video, and gifts. Ollson's listed assets of $929,428 and liabilities of $1.9 million in its filing.

OSKAR HUBER: Court Approves Sale of DD Huber Furniture ------------------------------------------------------Clint Engel at Furniture Today reports that the U.S. Bankruptcy Court for the District of New Jersey has approved the going-out-of-business sale for DD Huber Furniture & Design, the brand name of the merged operations of D&D Home Furnishings and Oskar Huber Furniture.

The sales at the 10 Philadelphia-area stores will most likely start in about two weeks, Furniture Today says, citing Jerry Cohen -- the attorney with Cohen Tauber Spievack & Wagner, which represents liquidator Planned Furniture Promotions.

According to Furniture Today, Planned Furniture has the right to run sales for 170 days to liquidate inventory at the stores and in DD Huber's two area warehouses. Planned Furniture will also assume billing on DD Huber's backlog of client orders to ensure customers receive those goods, the report says, citing Mr. Cohen.

Furniture Today relates that D&D Home merged operations with Oskar Huber in March 2008, hoping to gain from each other's strengths in merchandising and back-end operations, but declining business crushed the new company. Court documents say that sales plummeted 40% to 50% within a few months of the merger.

An attorney for DD Huber said that the company will evaluate whether it can reorganize and get back in business with fewer stores, according to Furniture Today. Planned Furniture, under the going-out-of-business deal, guarantees a payment of about $4.6 million to the company and its banks, Furniture Today relates. The report says that Planned Furniture will set aside some $500,000 of that amount to pay for the pre-bankruptcy orders and will pay $500,000 on top of the value of the inventory, to be distributed to creditors, the report states, citing Mr. Cohen.

Kevin Post at PressofAtlanticCity.com relates that Oskar Huber has closed its store in preparation for the going-out-of-business sale, but its landlord wants the sale delayed until the company can pay the promised $72,749 per month rent.

Kensington Square leases the 45,000-square-foot store to Oskar Huber. PressofAtlanticCity.com states that Kensington Square asked the Court to delay the sale until the rent due Oct. 1 has been paid, and claimed that DD Huber didn't ask permission to sublease the store to Planned Furniture.

Kensington Square also asked the Court for provisions to ensure the new tenant doesn't make changes to the building or signs without its consent, PressofAtlanticCity.com reports. Other creditors also filed objections to the sale proceeding, the report states.

The company and its debtor-affiliates filed for Chapter 11bankruptcy protection separately with the U.S. Bankruptcy Courtfor the District of New Jersey (Lead Case No. 08-28136) onSept. 22, 2008. Hal L. Baume, Esq., at Fox Rothschild, LLP,represents the Debtors in their restructuring efforts. In itspetition, the lead Debtor listed less than $50,000 in estimatedassets and less than $50,000 in estimated debts.

Court documents indicate that Oskar Huber owes its 31 largestunsecured creditors a total of $6,100,000, which includes $729,504 owed to Sealy Mattress Co. and $308,252 owed to Kohl's Department Stores.

PETTERS AVIATION: Will Need $7 Million to Continue 2008 Operations------------------------------------------------------------------Andrew Compart of Aviation Daily reported Wednesday that Sun Country Airlines Inc. told the U.S. Bankruptcy Court for the District of Minnesota that it will need $7 million to enable to continue in operations until Dec. 31, 2008. The company also told the Court that its liquidity problems were a result of the "'exploitation' by Petters Group or related parties of Petters Aviation's cash and credit line."

The airline's problems began when federal authorities launched a fraud investigation of former Petters Group Worldwide CEO Tom Petters, whose company owns Sun Country. Mr. Petters was arrested Oct. 3, 2008, on federal counts of fraud, money laundering and other charges.

Sun Country filed for Chapter 11 bankruptcy protection Oct. 6, but said it will not cease operations. The company said it will ask the Court's approval to obtain debtor-in-possession financing.

About Sun Country Airlines

Sun Country Airlines is a low-fare, low-cost passenger airline company. The company serves leisure travel markets with a fleet of seven new Boeing 737-800 aircrafts. Petters Aviation, an investor group including Tom Petters and his Petters Group Worldwide, along with Whitebox Advisors, acquired Sun Country in November 2006, according to the Star Tribune (Minneapolis-St. Paul).

PETROQUEST ENERGY: S&P Trims $150MM Sr. Notes Rating to B from B+-----------------------------------------------------------------Standard & Poor's Ratings Services lowered its issue-level rating on PetroQuest Energy Inc.'s $150 million senior notes to 'B' from 'B+', based on S&P's revision of the recovery rating on the senior notes to '3', which indicates its expectation of meaningful recovery in the event of a payment default, from '2'. PetroQuest's 'B' corporate credit rating is unchanged. The outlook is stable.

These changes follow PetroQuest's announcement that it has entered into a new $300 million asset-based lending facility and raised its borrowing base to $150 million from $95 million.

The rating on Lafayette, Louisiana-based independent oil and gas exploration and production company PetroQuest reflects the company's limited but growing reserve base (157 bcfe as of Dec. 31, 2007), a short, five-year reserve life, an elevated cost structure of about $6.50 including interest expense, and the highly capital-intensive nature of the exploration and production industry. Other rating factors include PetroQuest's good operational performance, including three-year average organic reserve replacement of 150%, solid financial measures reflecting current hydrocarbon prices, and a growing onshore reserve base to help buffer its capital-intensive Gulf Coast production.

RIVIERA POOLS: Won't Keep Arizona Diamondbacks Sponsorship----------------------------------------------------------Craig Harris of The Arizona Republic reported Monday that the Arizona Diamondbacks is looking for a new sponsor for its right field pool after Riviera Pools filed for Chapter 11 on Oct. 2, 2008, in Phoenix.

Ron Ostlund, president of Riviera Pools said Monday that the company could no longer justify the expense of keeping its five-year $1 million sponsorship of the Arizona Diamondbacks pool.

"The best thing we ever did was our tie-in with the Diamondbacks, and it more than paid for itself the first year," Ostlund said. "But we can't justify that expense. We are going through reorganization, and we will be much smaller when we come out. We can't afford to do it."

According to The Arizona Republic, Riviera, who was in the first year of its five-year sponsorship deal with the Arizona Diamondbacks, was the fourth sponsor for the pool.

Based in Phoenix, Arizona, Riviera Pools, Inc. is a pool builder. The company filed for Chapter 11 relief on Oct. 2, 2008 (Bankr. D. Ariz. Case No. 08-13494). Allan D. Newdelman, Esq., represented the Debtor as counsel. Ron Ostlund, company president, started the business in 1996.

SAGECREST DIXON: U.S. Trustee Sets 341(a) Meeting for October 20----------------------------------------------------------------The United States Trustee for the District of Connecticut will convene a meeting of creditors of SageCrest Dixon Inc. at 10:00 a.m., on Oct. 20, 2008, at the Office of the U.S. Trustee.

This is the first meeting of creditors required under Section341(a) of the Bankruptcy Code in all bankruptcy cases.

All creditors are invited, but not required, to attend. ThisMeeting of Creditors offers the one opportunity in a bankruptcyproceeding for creditors to question a responsible office of theDebtor under oath about the company's financial affairs andoperations that would be of interest to the general body ofcreditors.

Headquartered in Greenwich, Connecticut, SageCrest Dixon Inc., a debtor-affiliate of SageCrest Financial LLC, which provides short-term financing, filed for Chapter 11 protection on Sept. 11, 2008 (Bankr. D. Conn. Case No. 08-50844). Douglas J. Buncher, Esq., at Neligan Foley LLP, represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed both assets and liabilities between $10 million and $50 million.

Standard & Poor's also said that it affirmed its 'B+' counterparty credit rating on Sedgwick.

"The revised outlook reflects Sedgwick's consistently weak interest coverage ratio and burdensome financial leverage," explained Standard & Poor's credit analyst Andrew Dral. The company's debt burden has weighed more heavily on the financial ratios than originally anticipated when the additional $150 million term loan was granted in September 2006.

Sedgwick's competitive position and operating performance continue to improve. Standard & Poor's expects Sedgwick to solidify its position as the leading third-party administrator of workers' compensation and liability claims-management services. Management will accomplish this by cross-selling to existing customers, attracting new customers, and acquiring companies that will either broaden Sedgwick's product line or increase its market share.

Customer retention should remain strong. The economic environment is difficult, so outsourcing could boost an outsourcer's operating performance, but Sedgwick's historical revenue growth might still be difficult to obtain.

A possible revision of the outlook to positive or negative would depend on a number of factors, the most important of which are Sedgwick's adjusted EBITDA fixed-charge coverage ratio, debt-to-total capitalization, revenue growth, and adjusted EBITDA margin.

An upgrade would be predicated on Sedgwick meeting EBITDA fixed-charge coverage above 3.0x, GAAP interest coverage of more than 2.0x, a debt-to-total capital ratio of less than 50%, and a return on revenue margin of greater than 5% as well as management generally meeting revenue and EBITDA growth expectations and revenue-stream diversity improving. As of June 30, 2008, EBITDA fixed-charge coverage was 2.6x, interest coverage was 1.7x, debt to total capital was 63%, and return on revenue was 3.2%.

Sedgwick has met revenue and EBITDA growth expectations, but the original 2009 and 2010 revenue growth expectations have been revised lower. On a relative industry basis, customer diversity has room for further improvement--from both customer concentration and business segment perspectives. Macroeconomic conditions are poor, with rising unemployment, losses to payrolls, and reduced GDP estimates.

If operating performance suffers from an acquisition or does not improve from current second-quarter 2008 levels, Standard & Poor's would consider lowering the rating or revising the outlook to negative. Specifically, if EBITDA fixed-charge coverage does not progress toward 3.0x, interest coverage does not progress toward 2.0x, debt-to-capital does not continue to decline toward 50%, and ROR does not increase toward 5% then the possibility of a negative rating action increases. Standard & Poor's expects to see progress in Sedgwick diversifying its revenue stream. Not making progress toward diversifying the customer concentration or business segment base would weigh negatively on the rating.

SEMGROUP ENERGY: B.P. Oil Resigns, Trustee Names 6-Member Panel ---------------------------------------------------------------A Court filing discloses that B.P. Oil Supply Company resigned as member of the Official Committee of Unsecured Creditors effective Aug. 20, 2008. Accordingly, the Creditors' Committee is now composed of six members:

Roberta A. DeAngelis, Acting United States Trustee for Region 3, notified the Court that Pacific Investment has requested that David Behenna be identified as its representative, in replacement of David C. Flattum.

S&P previously placed the ratings on CreditWatch negative due to their potential exposure to Lehman Bros. as a counterparty. The affirmations and CreditWatch negative removals follow S&P's detailed review of the transaction's documents, which reveal that there is no exposure to Lehman as the counterparty.

STEAK 38: U.S. Trustee to Hold Meeting to Form Panel on October 10------------------------------------------------------------------The United States Trustee for Region 3, will hold an organizational meeting in the joint administered Chapter 11 cases of Steak 38 Brigantine, LLC, Steak 38 Brigantine Associates, LLC and Joseph DiAmore on October 10, 2008 at 10:00 a.m. at U.S. Trustee's Hearing Room, Bridge View 800-840, Cooper Street, Suite 102 in Camden, New Jersey.

The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases.

The organizational meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. A representative of the Debtor, however, may attend the Organizational Meeting, and provide background information regarding the bankruptcy cases.

About Steak 38 Brigantine

Headquartered in Brigantine, New Jersey Steak 38 Brigantine, LLC aka Steak 38 -- operates restaurants. The company and its affiliate, Brigantine Associates, LLC filed for Chapter 11 protection on September 15, 2008 (Bankr. D. N.J. Case Nos. 08-27559 and 08-27556). Scott M. Zuber, Esq. at Subranni, Ostrove & Zauber represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors they listed total assets of $324,918 and $2,750,000 and total debts of $2,457,383 and $1,908,664 respectively.

SUMMIT MORTGAGE: Fitch Affirms B5 Certificate Rating at 'BB-'-------------------------------------------------------------Fitch Ratings has taken rating actions on Summit Mortgage Trust certificates. The classes represent a beneficial ownership interest in separate trust funds, which include bonds that have been affirmed.

The rating actions were taken as part of Fitch's ongoing surveillance process of existing transactions.

T&T BEEFS: May File for Bankruptcy, To Keep Restaurant Open-----------------------------------------------------------Waveney Ann Moore at St. Petersburg (Florida) Times reports that James Edward Tomko Jr. said he will probably file for Chapter 11 protection, but keep his restaurant, Beef 'O'Brady's in St. Petersburg's Northeast Shopping Center, open.

"We're planning to restructure," St. Petersburg Times quoted Mr. Tomko as saying.

St. Petersburg Times relates that Beef 'O'Brady's landlord, Publix Super Markets, filed a lawsuit against T&T Beefs Inc. -- which does business as Beef 'O'Brady's -- and franchise owners Mr. Tomko and Kimberly Earl Tomko, seeking to evict the franchise for failing to pay rent. The report says that Publix Super Markets claimed that the restaurant owes more than $21,000 in back rent.

According to St. Petersburg Times, Nick Vojnovic, president of the Beef 'O'Brady's chain, said that his corporate office would let Mr. Tomko defer royalty payments.

St. Petersburg Times quoted Mr. Tomko as saying, "We tried to work with Publix, and we're hoping to emerge from this stronger. We're not going to give up. Our sales have actually increased in this market, and part of that is cleaning up the facility. It's just a matter of trying to control costs in a way to become profitable."

The lease for the restaurant, at 226 37th Avenue N, was signed on Feb. 10, 2006. The Tomkos signed their agreement as guarantors on May 30, 2007.

TALON FUNDING: S&P Slashes Class A Notes Rating to CCC- from BBB+-----------------------------------------------------------------Standard & Poor's Ratings Services lowered its rating on the class A notes issued by Talon Funding I Ltd., a collateralized debt obligation of asset-backed securities managed by Brightwater Capital Management to 'CCC-' from 'BBB+'. S&P lowered the rating on the notes primarily because of negative migration in the credit quality of the underlying collateral since its last rating action in November 2006.

Based on the Aug. 28, 2008, trustee report, 25.49% (41.04 million) of the total securities in the underlying collateral pool are rated 'CC' or lower, up from 13.83% ($31.25 million) in November 2006. Though the class A notes continue to benefit from paydowns due to the failure of the class A/B coverage test (balance has been paid down to 32.13%), the deterioration in the credit quality of the underlying assets does not support the previous 'BBB+' rating on the notes.

THORNBURG MORTGAGE: New Note Terms Amplify Difficulties, S&P Says-----------------------------------------------------------------Standard & Poor's Ratings Services said that Thornburg Mortgage Inc.'s announcement that it has modified the terms of its outstanding senior subordinated secured notes to allow for payment in kind payments further underscores the difficulties the company is facing due to the state of the housing and funding environment. This modification of debt supports the current rating, which will remain effective until the company has resolved the tender offer of its preferred shares.

The deadline for the tender offer has now been extended to Dec. 31, 2008. The PIK agreement allows the company to substitute stock or additional debt for its semiannual interest payments. Although this offers some short-term liquidity relief, it also adds to the company's longer-term challenges. S&P believes that the longer this continues and the longer the tender offer situation goes unresolved, the less likely it is that the company will be able to regain meaningful financial equilibrium.

TOWER AUTOMOTIVE: Closes Traverse City Plant, Eliminates 350 Jobs-----------------------------------------------------------------Due to the slump of the auto industry in North America, TowerAutomotive, Inc., will close its Traverse City plant and cut more than 350 jobs, The Associated Press reports. However, there is no exact date for the shutdown yet.

According to the report, approximately 318 hourly employees and 40 salaried workers who worked to produce small stampings and assemblies at Tower's Traverse plant will be affected by Tower's decision.

The Traverse City Record-Eagle reported that 45 workers have already been laid off and that they were not surprised by Tower's decision to close the plant.

Headquartered in Grand Rapids, Michigan, Tower Automotive Inc.-- http://www.towerautomotive.com/-- (OTC Bulletin Board: TWRAQ) is a global designer and producer of vehicle structural componentsand assemblies used by every major automotive original equipmentmanufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM,Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo.Products include body structures and assemblies, lower vehicleframes and structures, chassis modules and systems, and suspensioncomponents. The company has operations in Korea, Spain andBrazil.

On May 1, 2007, the Debtors filed their Chapter 11 Plan ofreorganization and Disclosure Statement explaining that plan. OnJune 4, 2007, the Debtors submitted an Amended Plan and DisclosureStatement. The Court approved the adequacy if the AmendedDisclosure Statement on June 5, 2007. On July 11, 2007, the Courtconfirmed the Debtors' Amended Chapter 11 Plan and the Debtorsemerged from Chapter 11 on July 31, 2007. (Tower AutomotiveBankruptcy News, Issue No. 76; Bankruptcy Creditors' Service,Inc., http://bankrupt.com/newsstand/or 215/945-7000).

TRADEWINDS AIRLINES: Refusal on Unprofessional Pleas Led to Bankr.------------------------------------------------------------------Tammy Stables Battaglia at Detroit (Michigan) Free Press reports that Donald V. Watkins, who owned a 77% stake in TradeWinds Airlines Inc., told the U.S. District Court in Detroit that his refusal to grant unprofessional requests led to the demise of city pension funds invested with the airline company.

According to Detroit Free Press, the refusal of these requests led the board to declare TradeWinds Airlines in default on a $30.1 million pension fund loan:

-- the hiring of a pension board trustee's relative,

-- donation to former Mayor Kwame Kilpatrick's legal defense fund,

-- cash contribution requests from trustees,

-- use of Mr. Watkins corporate jet aircraft for inappropriate purposes, and

-- a request by a trustee that Mr. Watkins meet and confer with a representative of hers who was the subject of an active City Hall-related federal bribery investigation.

Detroit Free Press relates that the Police and Fire Retirement System and the city's General Retirement System invested about $30.9 million in TradeWinds Airlines in February, through Mr. Watkins' firm, Watkins Aviation. The pension boards' trustees approved additional investments into TradeWinds Airlines in April and May, Detroit Free Press says. Mr. Watkins claimed that the trustees' attitude toward the investment changed for the worse after he refused to participate in a "pay-to-play" scheme, the report states.

The pension funds claimed that the legal proceedings started because Mr. Watkins missed making a capital contribution in March, court documents say.

About TradeWinds Airlines

Headquartered at the Triad International Airport in Greensboro,North Carolina, TradeWinds Airlines LLC -- http://www.tradewinds-airlines.com/ -- operates A300-B4F freighter aircraft for domestic and foreign customers. The company has operations at Miami International Airport and in Puerto Rico.

The airline filed for Chapter 11 protection on July 25, 2008 (Bankr. S. D. Fla. Case No. 08-20394). Scott L. Baena, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP represents the airline in its restructuring effort. The airline listed assets of between $1 million and $10 million, and debts of between $10 million and $50 million.

TRAINER WORTHAM: S&P Lowers Ratings on Three Classes of Notes-------------------------------------------------------------Standard & Poor's Ratings Services lowered its ratings on three classes of notes issued by Trainer Wortham First Republic CBO II Ltd. and placed one of the lowered ratings on CreditWatch with negative implications.

The downgrades and CreditWatch placement primarily reflect negative migration in the credit quality of the underlying collateral.

According to the Sept. 1, 2008, trustee report, 26.24% ($33.61 million) of the total securities in the underlying collateral pool were rated 'CCC+' or lower. Although the class A-1L notes continue to benefit from paydowns due to the failure of the senior coverage test (the balance has been paid down to 33.10%), the credit quality of the underlying assets has deteriorated to the point that it no longer supports the previous 'AAA' rating on the notes.

TROPICANA ENT: Files Framework for Joint Chapter 11 Plan--------------------------------------------------------Tropicana Entertainment LLC and its debtor-affiliates delivered with the U.S. Bankruptcy Court for the District of Delaware on Oct. 2, 2008, a proposed framework of a Chapter 11 joint plan of reorganization. Parties to the Plan Framework include the Debtors, the Steering Committee for the Holders of the OpCo Credit Facility Claims, the Steering Committee for the Holders of the LandCo Credit Facility Claims, and the Official Committee of Unsecured Creditors.

The Debtors inform the Court that they will commence discussions with their key constituents regarding the terms of the plan following the formulation of the Framework.

Under the Plan Framework, the Debtors intend to submit an application to the New Jersey Casino Control Commission requesting control of the "Atlantic City Assets," to be operated on an integrated basis with the Debtors' other casino and resort operations, and requisite qualification concerning those assets, Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates. The Debtors' Atlantic City Assets consist of Tropicana Casino and Resort of Atlantic City and all other assets of Adamar of New Jersey, Inc., including the stock of Manchester Mall, Inc.

If the Debtors regain control of the Atlantic City Assets as soon as reasonably practical, they will file the appropriate Chapter 11 petitions to make the Assets subject to the Bankruptcy Court's jurisdiction and to make DIP Facility proceeds available for capital expenditures and other investments in those Assets, according to Mr. DeFranceschi.

If, after a detailed assessment, the Debtors believe that the re-commencement of a sale process of the Atlantic City Assets is appropriate, they will expeditiously provide the Framework Parties' professionals with a proposed process for marketing and selling the Assets. Any sale will be conducted through an auction in accordance with Section 3693 of the Bankruptcy Code, Mr. DeFranceschi says.

The Parties agree to a "Clearing Price" of $950,000,000 in cash, or other amounts as the Framework Parties may otherwise agree, as the minimum acceptable price for the sale of the Atlantic City Assets.

Tropicana Atlantic City's state-appointed conservator, former Supreme Court Justice Gary Stein, recently chose Baltimore-based The Cordish Company, which developed "The Walk" in Atlantic City, as the lead bidder for the casino. Cordish offered $700,000,000 for the casino.

The Debtors deem Cordish' offer too low.

The Debtors will continue the marketing and sales process for the Casino Aztar Evansville as they examine strategic alternatives with respect to the riverboat casino's ultimate disposition.

The Debtors will also continue to develop and finalize a comprehensive business plan for their operations, which will form one of the bases for the Chapter 11 plan. To the extent relevant, Mr. DeFranceschi states, the Business Plan will contain multiple assumed alternatives regarding the Atlantic City Assets and the Casino Aztar, including sales of either casino.

Mr. DeFranceschi discloses that the Chapter 11 plan will contemplate the raising of capital, which may be in the form of one or more new credit facilities on the effective date of the Chapter 11 plan. The proceeds of the capital raising will be used to fund certain cash distributions under the Chapter 11 plan and for the Reorganized Debtors' post-emergence operations, he adds.

The Chapter 11 plan will also contemplate the issuance of shares of common stock in a new parent corporation created to hold the stock of the Reorganized Debtors, for distribution to certain holders of Claims and as part of a management or director incentive program, Mr. DeFranceschi tells the Court.

In general, among other things, the Chapter 11 plan will:

(a) be consistent with the Business Plan;

(b) provide that holders of Claims and Interests will receive distributions;

Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The company is one of thelargest privately-held gaming entertainment providers in theUnited States. Tropicana Entertainment owns eleven casinoproperties in eight distinct gaming markets with premierproperties in Las Vegas, Nevada and Atlantic City, New Jersey.

TROPICANA ENT: Wants to Amend DIP Credit Deal with Silver Point---------------------------------------------------------------As of Sept. 29, 2008, Tropicana Entertainment LLC and its debtor-affiliates disclosed that they have drawn roughly $20,000,000 under their DIP Credit Agreement with Silver Point Finance LLC, as administrative agent and collateral agent, and certain other lenders.

The Debtors note that since the Petition Date, they have undertaken a comprehensive evaluation of their operations, finances, and properties. As part of the evaluation, the Debtors' new management team and professional advisors have reviewed the budget and projections that formed the basis for the covenants under the DIP Credit Agreement.

In line with that evaluation, the Debtors recently determined that the budget and projections need to be reconsidered, given the challenging revenue environment faced by all casino operators and the impact of the Chapter 11 filing on their operations. The Debtors also ascertained that their consolidated EBITDA for the fiscal months ending May 31, 2008, and June 30, 2008, fell below the minimum requirements under the DIP Credit Agreement.

The Debtors' EBITDA situation has resulted in an Event of Default of the DIP Credit Agreement, Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, states. Accordingly, on Aug. 29, 2008, the Debtors and the DIP Lenders entered into a forbearance agreement pursuant to which, among other things, the Debtors acknowledged the existence of the EBITDA Covenant Default and the DIP Lenders agreed to forbear from exercising any remedies related to the Default, through and including October 14, 2008.

Against these backdrop, the Debtors initiated a dialogue with the DIP Lenders regarding a waiver and amendment to the DIP Credit Agreement. By Sept. 23, 2008, the Debtors note that they completed negotiations with the DIP Lenders on the terms of an agreement to waive the covenant default and to modify various covenants to enable the Debtors to be in compliance with the DIP Credit Agreement on a going-forward basis.

Subject to the satisfaction of certain conditions precedent and covenants, the DIP Facility Amendment generally provides for these waivers and modifications:

(b) Amended EBITDA Covenant -- The EBITDA covenants in Section 6.10 of the DIP Credit Agreement will be adjusted to reflect the Debtors' current projections.

(c) Amended Capital Expenditures Amounts -- The Capital Expenditures covenants in Section 6.09 of the DIP Credit Agreement will be adjusted based on the Debtors' current financial projections.

(d) Increase in Commitment and Mandatory Draw -- Te availability under the DIP Credit Facility will be increased to $80,000,000. In addition, the Debtors will be required to draw $47,000,000 at the closing, in addition to the $20,000,000 already drawn;

(f) 4% on New Money -- The Debtors will pay a 4% fee on the additional $13,000,000.

(g) 3% on Unused Commitment -- The Debtors will pay a 3% fee on any unused availability under the DIP Credit Agreement.

(h) Covenant Compliance -- The Debtors must remain within the 20% budget.

Under the Amended DIP Credit Agreement, the Debtors are entitled to make Capital Expenditures not to exceed these amounts, on a cumulative basis from September 1, 2008, through and including certain specified dates:

The Amended DIP Credit Agreement also provides that for any three-month period, Debtor Tropicana Entertainment Intermediate Holdings, LLC's Consolidated EBITDA may be less than these amounts on the last day of any fiscal month:

In connection with the DIP Amendment, the Debtors have agreed to pay a 2.25% fee or roughly $1,675,000 to the DIP Lenders.

Mr. Collins informs the Court that no other financial institution would consider providing a replacement postpetition financing facility on better terms than were offered or available under the DIP Amendment. Ultimately, the DIP Lenders agreed to significantly reduce their original fee request, he says.

Failure to enter into the DIP Amendment would deprive the Debtors of those waiver, protections, additional availability, and concomitant operational and financial benefits, and would severely undermine the Debtors' reorganization efforts, Mr. Collins asserts.

The current DIP Loan modifications proposed by the Debtors is the second amendment to the DIP Credit Agreement.

By this motion, the Debtors seek the Court's authority to enter into the most recent amendments of the DIP Credit Agreement and to pay certain related fees and expenses.

About Tropicana Entertainment

Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The company is one of thelargest privately-held gaming entertainment providers in theUnited States. Tropicana Entertainment owns eleven casinoproperties in eight distinct gaming markets with premierproperties in Las Vegas, Nevada and Atlantic City, New Jersey.

TRW AUTOMOTIVE: S&P Puts Neg. Watch on Weakening Europe Production------------------------------------------------------------------Standard & Poor's Ratings Services placed its ratings on Livonia, Michigan-based TRW Automotive Inc. on CreditWatch with negative implications. The CreditWatch reflects the rapidly weakening outlook for light-vehicle production in Europe, TRW's largest market, and ongoing challenges in an already weak North American market. The company said it expects a loss in the third quarter, including restructuring charges. TRW also withdrew its full-year 2008 sales and earnings guidance, citing lower future production in Europe and North America and increased commodity costs. The company intends to provide 2008 guidance when it reports third quarter results.

"Although TRW's credit profile, including liquidity, has been consistent with the current rating, we believe the outlook for the U.S., and particularly European, auto markets is increasingly grim," said Standard & Poor's credit analyst Nancy Messer. This trend could pressure TRW's results sufficiently to warrant a downgrade. But S&P believes the company's liquidity, even accounting for the worsening environment, is adequate.

One reason for a downgrade would be if S&P believed free operating cash flow was turning consistently negative, or if adjusted debt to EBITDA were exceeding 3.5x on a sustained basis. S&P estimates that either could occur, if for example, EBITDA fell about 15% from trailing-12-month June 2008 levels. Worsening global industry conditions would be the most likely cause of such a decline. Failure to offset price and commodity cost pressures with cost savings and operating efficiencies could be a contributing factor.

TRW is one of the world's 10 largest manufacturers of original equipment automotive parts and designs, and it manufactures active and passive safety-related products. TRW generates nearly 70% of its sales outside North America. Its largest customer, Volkswagen AG, provided 17% of 2007 sales. Combined sales to the challenged Michigan-based automakers in North America accounted for 22% of TRW's consolidated revenues in 2007. The company has strong technical capabilities in the safety-related product segment, with such content per vehicle expanding because of regulation and consumer preference.

Still, the industry is very challenging. The Western European market for new passenger cars is slipping rapidly as signs of lower consumer spending appear. North American OE production volumes are already very weak, and S&P expects U.S. sales of new light vehicles to decline to 14 million units this year, the lowest level in about 15 years, a 19% decline from the peak of 17.2 million units in 2000. S&P does not expect any significant recovery in 2009. Industry participants in the U.S. and Europe, including TRW, are exposed, in varying degrees, to cost increases for steel and other raw materials, which they can rarely recover in full from customers.

In addition, product mix has been unfavorable in 2008, as U.S. consumers have shifted to sedans from SUVs and even crossover utility vehicles, which typically carry more supplier content.

WACHOVIA CORP: Faces 1031 Tax Group Suit for Fraudulent Transfers -----------------------------------------------------------------Bloomberg's Erik Larson reported Tuesday that the bankruptcy trustee appointed in the chapter 11 cases of 1031 Tax Group LLC has sued Wachovia Corp. for $140 million for aiding former 1031 Tax Group CEO Edward Okun in transferring $240 million in real estate sale proceeds held by it to "inappropriate" accounts before the collapse of the tax firm and Mr. Okun's arrest. The complaint was filed filed Oct. 3 in U.S. Bankruptcy Court in New York, alleging unjust enrichment and breach of contract.

Five Wachovia units knew "[Mr.] Okun was misappropriating funds from the 1031 debtors," the company's bankruptcy trustee, Gerard McHale, said in the complaint. "Nonetheless, they continued to carry on business as usual with [Mr.] Okun." According to the complaint, "The 'like-kind' or '1031 exchange' lets people sell an investment property and then buy a similar one within six months, indefinitely deferring capital gains taxes."

According to Bloomberg, the suit alleged that Mr. Okun loaned customer funds to "two of his other businesses, Investment Properties of America and Okun Holdings".

1031 Tax Group folded when it failed to return $151 million of funds it held for more than 300 of its clients, Bloomberg says.

According to Bloomberg, the bankruptcy trustee said Wachovia was aware of the alleged fraud, and that Wachovia also transferred money to its own accounts which it used to repay its loans.

"Wachovia was entwined in all aspects of the 1031 debtors' operations, [Mr.] Okun's personal finances and Okun's other businesses," according to the complaint.

Mr. Okun is currently in jail after being indicted for wire and mail fraud in March, according to Bloomberg. A trial has been set for Jan. 19 in the U.S. District Court in Richmond, Va.

Bloomberg says that 1031 Tax Group sued Mr. Okun last month for stealing $5.1 million from the company to purchase a six-bedroom home in New Hampshire.

About 1031 Tax Group

Headquartered in Richmond, Virginia, The 1031 Tax Group LLC --http://www.ixg1031.com/-- is a privately held consolidated group of qualified intermediaries created to serve real propertyexchanges under Section 1031 of the Internal Revenue Code. Thecompany and 15 of its affiliates filed for Chapter 11 protectionon May 14, 2007 (Bankr. S.D.N.Y. Case No. 07-11447 through07-11462). Paul Traub, Esq., Norman N. Kinel, Esq., and Steven E.Fox, Esq., at Dreier LLP, represent the Debtors in theirrestructuring efforts. Thomas J. Weber, Esq., Melanie L.Cyganowski, Esq., and Allen G. Kadish, Esq., at Greenberg Traurig,LLP, represent the Official Committee of Unsecured Creditors. Asof Sept. 30, 2007, the Debtors had total assets of $164,231,012and total liabilities of $168,126,294, resulting in a totalstockholders' deficit of $3,895,282.

About Wachovia Corporation

Based in Charlotte, North Carolina, Wachovia Corporation (NYSE:WB) -- http://www.wachovia.com/-- is one of the nation's diversified financial services companies, with assets of $812.4 billion at June 30, 2008. Wachovia provides a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services to customers through 3,300 retail financial centers in 21 states from Connecticut to Florida and west to Texas and California, and nationwide retail brokerage, mortgage lending and auto finance businesses. Clients are served in selected corporate and institutional sectors and through more than 40 international offices. Its retail brokerage operations under the Wachovia Securities brand name manage more than $1.1 trillion in client assets through 18,600 registeredrepresentatives in 1,500 offices nationwide. Online banking isavailable at wachovia.com; online brokerage products and services at wachoviasec.com; and investment products and services atevergreeninvestments.com.

Wachovia is exposed to large mortgage losses as a result of its2006 purchase of mortgage lender Golden West Financial Corp.,according to The Wall Street Journal. The company, WSJ stated,now believes total losses for Golden West's payment option loanportfolio could eventually reach 12%, up from previous forecasts.

Wachovia has lowered its second-quarter results to account for apossible legal settlement. Wachovia said its second-quarter net loss will be $9.11 billion instead of $8.86 billion. It has disclosed a $500 million pretax increase to legal reserves.Wachovia has also disclosed plans to lay off 6,950 people toreduce expenses.

As reported in the Troubled Company Reporter on Oct. 8, 2008,Fitch has upgraded Wachovia's IDR to 'A+' from 'BB-' and placed it on Rating Watch Positive, along with the 'A+' senior debt of Wachovia and subsidiaries, following Wells Fargo & Company's definitive agreement to acquire Wachovia Corporation and subsidiaries.

As reported in the Troubled Company Reporter on Oct. 2, 2008,Moody's Investors Service lowered Wachovia Corporation's preferred stock rating to Ba3 from A3 and placed it under review with direction uncertain.

As reported in the Troubled Company Reporter on Oct. 1, 2008,Standard & Poor's Ratings Services placed all its ratings onWachovia Corp. and Wachovia Bank on CreditWatch with negativeimplications. S&P also lowered its DRD Series J and Kand convertible preferred stock Series L ratings on WachoviaCorporation to 'BB' from 'A-', as these securities will not beacquired and will continue to reside with the new Wachovia.

WCI COMMUNITIES: Wants Supplemental Home Warranty Insurance Ok'd----------------------------------------------------------------WCI Communities Inc. and its debtor-affiliates ask the UnitedStates Bankruptcy Court for the District of Delaware to enter intoa supplemental home warranty insurance policy with Residential Warranty Company and Western Pacific Mutual Insurance Company orthe "Supplemental Insurers."

The Debtors earned and long enjoyed the reputation of being a high-end, high-quality home builder. The Debtors relate that the public's view of them has been maintained and reinforced by, among other things, their warranty programs. Under those Programs, the Debtors stand behind the quality of their product by providing for repair of material defects in workmanship or materials for specified periods of time after a home or condominium unit is sold.

"Indeed, [the Debtors] believe that all the decision of many of its customers to purchase a WCI home is based at least in part of the strength of its Home Warranty Programs," Jeffrey M. Schlerf, Esq., at Bayard P.A., in Wilmington, Delaware, contends.

Before commencing the Chapter 11 cases, the Debtors recognized that the publicity surrounding an "in court" reorganization process may undermine the public's confidence in their ability to perform their obligations under the Home Warranty Programs, potentially adversely impacting their ability to continue selling homes and condominium units.

Mr. Schlerf tells the Court that the Debtors' Chapter 11 activities include the solicitation of proposals from several insurers regarding the terms on which they would backstop the Debtors' ongoing warranty obligations with respect to new home and condominium sales contracts entered into during the pendency of the Chapter 11 cases. Based on a review and assessment of the proposals made and subsequent negotiations, the Debtors ultimately determined that the proposed Supplemental Policy submitted by the Supplemental Insurers is best suited to their needs and requirements.

Under the Supplemental Policy, RWC, as warranty administrator, and WPM would guarantee the Debtors' obligations under the Home Warranty Programs with respect to certain latent and material home defects, including structural, mechanical and electrical damage up to the full purchase price of the home.

Under the terms of the Supplemental Policy, all homes and condominium units selected by the Debtors for coverage must be enrolled before the completion of construction unless certain enumerated exceptions set forth in the Supplemental Policy is met. At this time, the Debtors say they intend to cover only contracts entered into with new homebuyers after the date the Court grants their Motion. However, if deemed necessary, the Debtors aver they may extend coverage to contracts entered into with new homebuyers after the Petition Date, provided the homes of condo units have not closed and are unoccupied.

The Debtors are required to address all costs and administration duties of warranty repairs within the first two years of the Supplemental Policy:

* The Debtors estimate that the Supplemental Policy will cost them $1,281,667, which is 0.49% of the total projected closing value of $263,000,000 of the 493 closings that they anticipate will occur within the next 12 months.

* The cost basis is $3 per $1,000 of closing value and $1,000 per closed unit for contribution to the loss fund escrow account.

* The Debtors' total cost estimate includes an administrative warranty fee of $788,667 and a total deposit in the loss fund escrow account of $493,000.

The deposit in the loss fund escrow account will provide a source of funds for the Supplemental Insurers to use to offset any losses resulting solely from the Debtors' non-performance or default of their obligations, Mr. Schlerf points out.

If the Debtors fully perform their obligations and do not default, the funds in the Loss Fund Escrow Account will be returned to the Debtors 25 months after the closing of the final unit during the coverage period, Mr. Schlerf notes.

WCI COMMUNITIES: Asks Court to Extend Removal Period to June 2--------------------------------------------------------------WCI Communities Inc. and its debtor-affiliates ask the UnitedStates Bankruptcy Court for the District of Delaware to extend the time period within which they may file notices of removal with respect to any action pending on the Petition Date through and including the later of:

(a) June 2, 2009; or

(b) 30 days after entry of an order terminating the automatic stay with respect to any particular action sought to be removed.

The Debtors further seek that the Removal Period Order be without prejudice to (i) any position they may take regarding whether Section 362 of the Bankruptcy Code applies to stay any civil proceedings; and (b) their right to seek further extensions of the Removal Periods.

The Court will convene a hearing on October 22, 2008, to consider the Debtors' request.

As of the Petition Date, the Debtors were parties to numerous actions pending in multiple courts and tribunals. The Debtors relate that they are defendants in more than 170 prepetition civil lawsuits, which are at various stages of litigation and pending in numerous jurisdictions across the country.

Jeffrey M. Schlerf, Esq., at Bayard P.A., in Wilmington, Delaware, tells the Court that as a result of the considerable time and attention that has been required to initiate the Debtors' Chapter 11 proceedings and to operate the Debtors' businesses during the weeks since the Petition Date, the Debtors, their management and employees, and their professionals have not had sufficient time to investigate fully the existence of any and all pending Actions or to evaluate completely the merits of removing the Actions.

Section 1452 of the Bankruptcy Code and Rule 9027 of the Federal Rules of Bankruptcy Procedure govern the removal of pending civil actions. Section 1452(a) provides that "a party may remove a claim or cause of action in a civil action other than a proceeding before the U.S. Tax court or a civil action by a governmental unit to enforce such governmental unit's police or regulatory power, to the district court for the district where such civil action is pending. . . . "

Thus, the current deadline for the Debtors' Removal Period is November 3, 2008.

Rule 9027(a)(2) further provides that "if the claim or cause of action in a civil action is pending when a case under the [Bankruptcy] Code is commenced, a notice of removal may be filed only within the longest of (A) 90 days after the order for relief in the case under the Code, (B) 30 days after entry of an order terminating a stay, if the claim or cause of action in a civil action has been stayed under Section 362 of the Code, or (C) 30 days after a trustee qualifies a chapter 11 reorganization case but not later than 180 days after the order for relief."

Mr. Schlerf asserts that cause exists to remove the Removal Period and provide the Debtors with additional time to ascertain whether the Actions should be removed. He points out that:

-- The Debtors were parties to numerous Actions pending in multiple courts and tribunals;

-- During the Removal Period, the Debtors have been focusing on various critical issues, including preparation of their schedules and statements of financial affairs, preliminary analysis of the Actions, obtaining DIP financing, responding to requests for relief from the automatic stay, assessing the rejection and assumption of executory contracts and unexpired leases, and working with their professionals to begin formulation of a business plan that will form the basis for a Chapter 11 plan.

WCI COMMUNITIES: To Increase Claimants' Lien Cap to $20.5 Million-----------------------------------------------------------------WCI Communities Inc. and its debtor-affiliates ask the UnitedStates Bankruptcy Court for the District of Delaware to amend thePrepetition Lien Claim Payment Procedures Order to increase thecap on authorized payments to lien claimants to $20,500,000.

After a hearing on August 5, 2008, the Court authorized the Debtors to pay lien claims in accordance with Lien Claim Procedures in an aggregate amount not to exceed $15,300,000. The Court's Order was without prejudice to the Debtors seeking further relief to increase the Original Lien Cap.

The Debtors disclose that as of September 29, 2008, they have paid $6,216,742 to Lien Claimants, with most of the payments having been made to permit the Debtors to close on sales of homes and condominium units. Another $9,000,000 of Potential Lien Claims is currently being considered and analyzed for payment in the near term, the Debtors note. Thus, the Debtors anticipate exceeding the $15,300,000 Original Lien Cap of by early to mid-November.

Since entry of the Lien Claims Order, the Debtors tell the Court that they have expended significant time and effort thoroughly vetting the prepetition open accounts payable and open purchase orders in an attempt to determine a totality of valid prepetition obligations. They also undertook an exhaustive process of determining which individual Lien Claimants hold, or could hold, valid Lien Claims based on applicable law.

The Debtors determined the appropriateness and timing of potential payments based on, among other things, whether the Lien Claims:

(a) absolutely had to be paid or could be deferred or avoided;

(b) are directly related to capturing immediate cash flow;

(c) are connected with the completion of construction of homes over the next several months; or

(d) are connected with the completion of community amenities critical to the marketing and selling of current home inventory.

Based on the Analysis, the Debtors ascertain that they need to increase the Original Lien Cap by $5,200,000.

By increasing the Lien Cap, the Debtors reason that they will be able to resolve the Lien Claims on 127 homes and 19 tower units that are currently under contract to be sold, 292 homes that are already built or near completion that have not been sold, and 486 tower units that are already built or near completion that have not been sold. The Debtors note that the estimated revenue from the sale of the homes and tower units exceed $700,000,000.

September 2008 Vendor Claim Payments

In accordance with the Court-approved vendor claim payment procedures, the Debtors paid an aggregate of $6,099,571 on account of certain prepetition claims of lien claimants and $1,441 on account of certain prepetition vendor claims during the month of September 2008.

WCI COMMUNITIES: Panel Taps Houlihan Lokey as Financial Advisor---------------------------------------------------------------The Official Committee of Unsecured Creditors of WCI CommunitiesInc. and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware to retain Houlihan LokeyHoward & Zukin Capital, Inc., as its financial advisor andinvestment banker.

Houlihan Lokey is a nationally recognized investment banking and financial advisory firm with 13 offices worldwide and more than 800 professionals. It provides investment banking and financial advisory services and execution capabilities in a variety of areas, including financial restructuring.

The Committee recognizes that Houlihan Lokey has served as financial advisor in some of the largest and most complex restructuring matters in the United States, including serving as the financial advisor to certain debtors in the Chapter 11 proceedings of, among others, Buffets Holdings, Inc., XO Communications, Inc., NII Holdings, Inc. (Nextel International), Covad Communications, Inc., Leiner Health Products, Inc., Propex Inc., World Health Alternatives, Inc., Kimball Hill, Inc., andAmeriServe Food Distribution, Inc. The firm has also served as financial advisor to the official creditors' committees in the Chapter 11 proceedings of Worldcom, Inc., Enron Corp., Williams Communications Group, Inc., Refco Inc, Mirant Corp. and Kaiser Aluminum Corporation.

In light of the size and complexity of the Debtors' cases, the Committee says it requires the services of a seasoned and experience advisor and one that is familiar with the Debtors' business operations and the Chapter 11 process. The Committee believes that Houlihan Lokey is well-qualified to provide it services in a cost-effective, efficient, and timely manner.

Specifically, the Committee needs Houlihan Lokey to:

(a) analyze the Debtors' business plans and forecasts;

(b) evaluate the Debtors' assets and liabilities;

(c) assess financial issues and options concerning (i) the sale of the Debtors, either in whole or in part, and (ii) the Debtors' Chapter 11 plan of reorganization or any other Chapter 11 plan;

(d) analyze and review the Debtors' financial and operating statements;

(e) assist in the determination of an appropriate capital structure for the Debtors;

(f) assist with a review of any Debtor proposed key employee incentive or other similar retention plan;

(g) analyze strategic alternatives available to the Debtors;

(h) evaluate the Debtors' debt capacity in light of their projected cash flows;

(i) assist in the review of claims;

(j) assist it in analyzing any DIP and exit financing proposals;

(k) represent the Committee in negotiations with the Debtors and third parties;

(l) provide financial analyses;

(m) provide testimony in Court on behalf of the Committee, if necessary; and

(n) provide any other financial advisory and investment banking services as may be agreed upon by Houlihan Lokey and the Committee.

The Committee tells the Court that Houlihan Lokey has been providing critical services to it as of August 15, 2008. Those services include reviewing extensive operating information, meeting with the Debtors' management, analyzing various issues confronting the Debtors, and communicating to the Committee regarding similar matters.

For its services, Houlihan will be paid a $175,000 monthly fee. The firm will also be entitled to a restructuring fee equal to $3,000,000 upon the confirmation of any Chapter 11 plan.

Houlihan will be reimbursed for reasonable out-of-pocket expenses it incurs from time to time in connection with its services, promptly after invoicing the Debtors.

The Debtors will indemnify and hold Houlihan Lokey harmless from and against any and all losses, claims, damages or liabilities in connection with the firm's engagement, except to the extent they arise as a result of any gross negligence or willful misconduct on the part of Houlihan Lokey in the performance of its services.

David R. Hilty, a managing director of Houlihan Lokey, assures the Court that his firm is a "disinterested person" as the term is defined under Section 101(14) of the Bankruptcy Code. Mr. Hilty maintains that none of Houlihan Lokey's officers, directors, managers, members, partners, and employees:

-- is a creditor, an equity security holder, or an insider of the Debtors;

-- is or was, within two years before the date of the filing of the petition, a director, officer, or employee of the Debtors; and

-- has an interest materially adverse to the interest of the estates of any class of creditors or equity security holders, by reason of any direct or indirect relationship to, connection with or interest in the Debtors or for any other reason.

WASHINGTON MUTUAL: Fitch to Withdraw Ratings in 30 Days -------------------------------------------------------Following Washington Mutual, Inc.'s filing of Chapter 11 bankruptcy, Fitch has downgraded the Issuer Default Ratings to 'D' and removed them from Rating Watch Negative. Fitch will withdraw the ratings of WM in approximately 30 days.

In addition, Fitch has assigned recovery ratings to various WM obligations. Creditors of Washington Mutual Bank are dependent upon the FDIC, acting as receiver, for any potential recovery. Aside from the $1.9 billion payment that the FDIC received from JPMorgan Chase for WMB's banking operations, the value of any other assets remaining in the estate remains unclear. As a result, Fitch has assigned a recovery rating of 'RR5' to the approximately $10 billion most senior obligations of the bank.

WM had cash of approximately $5 billion when the bank was closed. Those funds had been placed in deposits of Washington Mutual Bank, fsb. WM is still in the process of confirming the status of those deposit funds. Fitch has assumed that ultimately those funds will be returned to WM, although considerable uncertainty remains. Assuming these funds are returned, senior creditors could see a significant recovery. Senior debt outstanding totals approximately $4.9 billion. Fitch assigned a Recovery Rating of 'RR4' to WM's senior debt and 'RR6' to subordinated debt and preferred stock.

The 'BB+' affirmation reflects Wesbury's consistent operating profitability since fiscal 2004, modest debt burden, and improved occupancy through December 2007. Wesbury's profitability stems from the organization's overall census gains in its nursing facilities and continued focus on controlling expenses, while maintaining consistent reimbursement rates from Medicaid. In fiscal 2007 and through the six month interim period ended June 30, 2008, Wesbury generated excess margins of 2.3% and 6.2% respectively as compared to the 2007 'BBB' median of 4.8%.

Wesbury's debt burden is light with maximum annual debt service as percentage of revenue of just 4.7% leading to solid coverage of MADS of 2.7 times through six month interim period. Occupancy in Wesbury's independent living and skilled nursing units averaged 95.3% and 94.1%, respectively through June 30, 2008. Occupancy in the assisted living facility has improved to 84% in 2008 from 81.6% in fiscal 2006.

Credit concerns remain Wesbury's high exposure to Medicaid payors and light liquidity relative to expenses. In fiscal 2007, Medicaid payors represented approximately 60% of total revenues in the nursing units, which exposes Wesbury to changes in reimbursement rates and methodology. As of June 30, 2008 unrestricted cash and investments totaled $8.5 million, which translated into 151 days cash on hand, a cushion ratio of 7.6x, and cash to debt of 66%.

Wesbury United Methodist Community is a Type B continuing care retirement community with 62 independent living villas, 16 independent living apartments, 103 assisted living beds, 210 skilled nursing beds, and a free standing 37-bed assisted living facility located in Meadville, Pennsylvania. Wesbury covenants to provide audited annual financial statements and quarterly unaudited financials to bondholders and the Trustee. Fitch notes that disclosure by Wesbury has been timely and has also included utilization statistics and a management discussion and analysis.

S&P removed all ratings on the company from CreditWatch with negative implications, where it had placed them on April 28, 2008, following the announcement that Mars Inc. would merge with Wrigley in a partially debt-financed transaction valued at about $23 billion. The outlook is stable. Total debt at Wrigley was about $1.3 billion at June 30, 2008 (and $10 billion pro forma for the acquisition by Mars).

"The downgrade reflects the company's more aggressive financial policy and significantly weaker credit measures, given the substantial increase in debt associated with this transaction," noted Standard & Poor's credit analyst Alison Sullivan. S&P estimates pro forma leverage would be about 7x as of June 30, 2008.

Funding for the transaction includes about $11.6 billion from Mars, a $4.8 billion senior secured credit facility at Wrigley, $4.4 billion of subordinated debt from Berkshire Hathaway (AAA/Stable/A-1+), and a $2.1 billion minority equity investment by Berkshire Hathaway in the Wrigley subsidiary. Wrigley is now a privately owned, separate, stand-alone subsidiary of Mars. The combined entity creates the world's leading confectionery company with more than $27 billion in sales. As part of the transaction, Mars transferred its global non-chocolate confectionery sugar brands, including Starburst and Skittles, to Wrigley.

Wrigley's common stock ceased trading on The New York Stock Exchange and the Chicago Stock Exchange at the close of the market on Oct. 6, 2008 and was delisted. Similarly, S&P expects the existing $1 billion of unsecured notes will be delisted and the company will no longer file financial results with the SEC. As a result, S&P expects to withdraw all of its public ratings on Wrigley, including its corporate credit rating, in the very near term.

WR GRACE: Disclosure Statement Hearing Slated for Oct. 27---------------------------------------------------------W. R. Grace & Co. and debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve the Disclosure Statement describing the Joint Plan of Reorganization they filed together with the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative, and the Official Committee of Equity Security Holders on Sept. 19, 2008.

"Adequate information" means information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor and the condition of the debtor's books and records, that would enable a hypothetical reasonable investor typical of holders of claims or interests of the relevant class to make an informed judgment about the plan.

According to Section 1125(b), the primary purpose of a disclosure statement is to provide all material information which creditors and interest holders affected by a proposed plan need in order to make an informed decision whether to vote for or against the plan.

In behalf of the Debtors, David M. Bernick, Esq., at Kirkland & Ellis LLP, in New York, asserts that the Disclosure Statement is the product of the Debtors' extensive review and analysis of the circumstances leading to the Chapter 11 cases and a thorough analysis of the Plan. The Disclosure Statement, he adds, contains the pertinent information necessary for holders of claims or equity interests who are eligible to vote to make an informed decision about whether to accept or reject the Plan, including:

* the history of the Debtors, including certain events leading to the commencement of their Chapter 11 cases;

* the operation of the Debtors' businesses and significant events during the Debtors' Chapter 11 cases;

* the Debtors' prepetition capital structure and indebtedness;

* the Debtors' corporate structure;

* claims asserted against the Debtors' estates and the procedures for the resolution of disputed, contingent and unliquidated claims;

* a description and summary of the injunction and releases provided for by the Plan;

* the purpose, use, and effect of the Plan's contemplated limited substantive consolidation;

* certain risk factors to consider that may affect the Plan;

* the restructuring transactions contemplated by the Plan, including the funding of the Asbestos PI Trust and the Asbestos PD Trust;

* a liquidation analysis and other financial information, including the Debtors' financial projections;

* certain securities law and federal income tax law consequences of the Plan;

* the provisions governing distributions under the Plan;

* the means for implementation of the Plan; and

* a disclaimer indicating that no statements or information concerning the Debtors and their assets and securities are authorized other than those set forth in the Disclosure Statement.

Mr. Bernick submits that the Disclosure Statement complies with all aspects of Section 1125 and addresses the information in a manner that provides holders of impaired claims or equity interests who are entitled to vote to accept or reject the Plan with adequate information and should, therefore, be approved.

The Court will convene a hearing on Oct. 27, 2008, to consider approval of the Disclosure Statement. Objections are due Oct. 17, 2008. Any replies to the Disclosure Statement Objections will be filed with the Court by the Plan Proponents on or before October 23, 2008.

* * *

On Oct. 1, 2008, the Bankruptcy Court entered an order approving the Disclosure Statement and the solicitation procedures. However, the Bankruptcy Court Clerk noted that the Order was entered in error.

An individual, Charles K.S., filed, in a hand-written letter, a response to the Debtors' request to approve the disclosure statement. Several claimants injured by exposure to asbestos from the Debtors' operations in Libby, Montana, asked the Court to reconsider the October 1 Order and schedule a deadline for submission of objections to the Disclosure Statement by no earlier than November 7, 2008, and the Disclosure Statement Hearing no earlier than November 24, 2008.

According to the Libby Claimants, the Plan Proponents filed an incomplete reorganization plan and a similarly incomplete disclosure statement. The Libby Claimants complained that the Plan and related documents do not reflect an agreement with the Libby Claimants on how their claims should be treated.

Arguing for the Libby Claimants, Adam G. Landis, Esq., at Landis Rath & Cobb, LLP, in Wilmington, Delaware, said the Libby Claimants' interests and concerns have not been fairly addressed in the Plan. To the contrary, the other members of the PI Committee have joined with the Debtors in proposing a Plan and related trust agreement that have been crafted so as to satisfy other asbestos claimants while leaving the Libby Claimants with no assurance of fair distribution.

Mr. Landis told the Court that the Libby Claimants were not permitted to review advance drafts of the Plan or the Disclosure Statement, thus the Libby Claimants will not have a meaningful opportunity to review the Plan documents and prepare any appropriate objections to the approval of the Disclosure Statement if the deadline for objections remains set for Oct. 17.

Mr. Landis also pointed out that numerous exhibits are missing, including an exhibit listing parties that will be protected by the proposed channeling injunction. Moreover, he noted that there has been an indication that other significant agreements have been reached that are not reflected in the Plan and Disclosure Statement as filed.

Judge Fitzgerald dismissed the Libby Claimants' motion for reconsideration because it was not filed in compliance with the Case Management Order or the Delaware Local Rules of Procedure.

At Dec. 31, 2006, the W.R. Grace's balance sheet showed totalassets of $3,620,400,000 and total debts of $4,189,100,000.As of November 30, 2007, W.R. Grace's balance sheet showed totalassets of $3,335,000,000, and total debts of $3,712,000,000.

WR GRACE: Wants Plan Solicitation Procedures Approved-----------------------------------------------------W. R. Grace & Co. and debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve uniform noticing, soliciting, balloting, voting, and tabulation procedures with respect to the confirmation of their Joint Plan of Reorganization.

Under the Plan, only holders of Class 6 asbestos-related personal injury claims, Class 8 Canadian ZAI property damage claims, and Class 10 equity interests in the parent are within impaired classes and are entitled to vote on the Plan. While holders of Class 7 asbestos PD claims are unimpaired because their claims will be paid in full, the Debtors have agreed to solicit the acceptances of Class 7 solely to the extent required by Section 524(g) of the Bankruptcy Code.

The Debtors, acting through their voting agent BMC Group, Inc., will solicit acceptances of the Plan by mailing solicitation material to holders of impaired claims and to the representative counsel in the Canadian Companies' Creditors Arrangement Act. The Solicitation Package will contain:

(1) the confirmation hearing notice, which sets forth the voting deadline and the Plan objection deadline;

(2) the Disclosure Statement Order without exhibits;

(3) the Disclosure Statement;

(4) the exhibit book with the Plan attached;

(5) the Voting Procedures;

(6) one or more applicable ballots and master ballots, together with voting instructions and information relative to the return of the ballots or master ballots;

(7) pre-addressed return envelopes; and

(8) any other materials ordered by the Court to be included.

The plan and disclosure statement will be mailed with the notice of the hearing only to the debtor, any trustee or committee appointed, the Securities and Exchange Commission, and any party-in-interest who requests in writing a copy of the statement or plan. The Debtors have mailed copies of the Disclosure Statement Hearing Notice by first-class mail to:

* all persons or entities who had filed proofs of claim or interest in the Debtors' cases that were not subsequently withdrawn or disallowed by the Court;

* all creditors listed on the Debtors' Schedules of Liabilities as holding liquidated, non-contingent and undisputed claims;

* all holders of equity interests as of August 22, 2008;

* any other known holders, or counsel to holders, of claims against, or interests in, the Debtors; and

* all parties currently included on the general service list maintained by the Debtors pursuant to Rule 2002 of the Federal Rules of Bankruptcy Procedures.

Mr. Bernick notes that the Disclosure Statement Hearing Notice identifies the date, time and place of the Disclosure Statement Hearing and procedures for asserting objections, if any, to the approval of the Disclosure Statement.

The Debtors and the Plan Proponents are authorized by the Court to file an omnibus reply to any timely filed objections or supplemental briefs in support of Plan confirmation before seven calendar days before the Confirmation Hearing.

Non-Voting Notices

Holders of claims in unimpaired classes are deemed to accept the Plan and are not entitled to vote except holders of asbestos PD claims to the extent required by Section 524(g). As a result, the Debtors will send a notice of non-voting class status to the unimpaired claimants except Class 7 claimants in lieu of a Solicitation Package. The Notice of Non-Voting Class Status will contain instructions on how to obtain copies of the Plan and Disclosure Statement from the Voting Agent if claimants so desire.

Ballot Forms

The Debtors propose to prepare and customize Ballots for creditors and Master Ballots for beneficial holders of claims to tabulate acceptances of the Plan. The forms of the Ballots are based on Official Form No. 14 but will be modified to include additional information that the Debtors deem is relevant and appropriate for each Class of Claims or Interests entitled to vote on the Plan.

Voting Record Date

As previously reported, all asbestos PI claims will be channeled to an asbestos PI trust for payment. The PI Trust will be funded from, among others, a warrant to acquire 10 million shares of W.R. Grace & Co. common stock at an exercise price of $17.00 per share, expiring one year from the effective date of a plan of reorganization.

The Debtors have determined to provide the registrars of Parent Common Stock advance notice of approximately two business days to enable those responsible for assembling ownership lists of the Parent Common Stock to compile a list of holders as of a date certain.

The Debtors will give entities advance notice of the date of the hearing on the proposed Disclosure Statement, the hearing could be continued by the Court, or the Disclosure Statement Order might not be entered on the date of a hearing.

The Debtors ask the Court to set the date that is two business days after the date of entry of a Disclosure Statement order as the Voting Record Date for purposes of determining creditors and interest holders entitled to vote on the Plan.

Voting Deadline and Confirmation Hearing Date

The Debtors ask the Court to establish four weeks before the Confirmation Hearing as the Voting Deadline. They also ask the Court to schedule the Confirmation Hearing, subject to the Court's availability and calendar, to begin during the last week of January 2009.

The Debtors submit that the proposed timing for the Confirmation Hearing complies with the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and the Local Rules of Bankruptcy Procedure for the District of Delaware, and will enable the Debtors to pursue confirmation of the Plan in a timely manner.

Plan Objection Deadline

Pursuant to Rule 3020(b)(1) of the Federal Rules of Bankruptcy Procedure, objections to confirmation of a plan must be filed and served within a time fixed by the court. The Debtors ask the Court to direct that objections to confirmation of the Plan or proposed modifications to the Plan, if any must:

* be in writing;

* state the name and address of the objecting party and the amount and nature of the claim or interest of the party;

* state with particularity the basis and nature of any objection to the Plan and, if practicable, proposed modification to the Plan that would resolve the objection;

* conform to the Federal Rules of Bankruptcy Procedure and the Local Rules of Bankruptcy Procedure for the District of Delaware; and

* be filed, together with proof of service, with the Court and served so that they are received by notice parties no later that the Plan Objection Deadline on the date that is four weeks before the Confirmation Hearing.

The Debtors contend that the proposed procedures and timing for filing and service of objections and proposed modifications, if any, to the Plan will afford the Court, and the Plan Proponents and other parties-in-interest enough time to consider the objections and proposed modifications before the Confirmation Hearing while providing more than 25 days notice of the Plan Objection Deadline given that the Debtors intend to provide notice of the deadline in connection with the solicitation of the Plan, which the Debtors anticipate will be completed well in advance of the date that is 25 days before the Plan Objection Deadline.

At Dec. 31, 2006, the W.R. Grace's balance sheet showed totalassets of $3,620,400,000 and total debts of $4,189,100,000.As of November 30, 2007, W.R. Grace's balance sheet showed totalassets of $3,335,000,000, and total debts of $3,712,000,000.

Fitch has identified an average of 4.3% Loans of Concern in each of the 34 transactions reviewed. These Loans of Concern include delinquent, specially serviced as well as performing loans with low debt service coverage ratios, those suffering from declining market conditions, competition from stronger properties, poor property management, loans which were underwritten to expected future performance and those which needed debt service reserves to remain current. Fitch is closely monitoring performance of these loans.

While performing Loans of Concern are factored into the long-term ratings, Fitch applies an increased probability of default and loss severities when determining rating outlooks. These loss severities are used to derive a liquidated credit enhancement scenario, which is then compared to a base case expectation from issuance.

-- 17 transactions are assigned stable Rating Outlooks to all of their rated bonds;

Fitch will continue to assign Rating Outlooks to the remaining U.S. CMBS bonds as they are identified for review through its regular surveillance practices.

* S&P Cuts Ratings on 30 Tranches from Six Cash Flow & Hybrid CDOs------------------------------------------------------------------Standard & Poor's Ratings Services lowered its ratings on 30 tranches from six U.S. cash flow and hybrid collateralized debt obligation transactions. S&P removed 16 of the lowered ratings from CreditWatch with negative implications. At the same time, S&P placed one additional rating from Duke Funding IV Ltd. on CreditWatch with developing implications. S&P revised the CreditWatch status of one of the lowered ratings to developing from negative. The ratings on 13 of the downgraded tranches are on CreditWatch with negative implications, indicating a significant likelihood of further downgrades.

The CreditWatch placements primarily affect transactions for which a significant portion of the collateral assets currently have ratings on CreditWatch with negative implications or have significant exposure to assets rated in the 'CCC' category.

The 30 downgraded U.S. cash flow and hybrid tranches have a total issuance amount of $7.617 billion. Five of the six affected transactions are high-grade structured finance CDOs of asset-backed securities, which were collateralized at origination primarily by 'AAA' through 'A' rated tranches of residential mortgage-backed securities and other SF securities. The other transaction is a CDO of CDO that was collateralized at origination primarily by notes from other CDOs, as well as by tranches from RMBS and other SF transactions. The CDO downgrades reflect a number of factors, including credit deterioration and recent negative rating actions on U.S. subprime RMBS.

To date, including the CDO tranches listed below and including actions on both publicly and confidentially rated tranches, S&P has lowered its ratings on 3,893 tranches from 879 U.S. cash flow, hybrid, and synthetic CDO transactions as a result of stress in the U.S. residential mortgage market and credit deterioration of U.S. RMBS. In addition, 1,269 ratings from 451 transactions are currently on CreditWatch with negative implications for the same reasons. In all, S&P has downgraded $455.170 billion of CDO issuance. Additionally, S&P's ratings on $28.926 billion of securities have not been lowered but are currently on CreditWatch with negative implications, indicating a high likelihood of future downgrades.

* S&P Cuts Rtngs on 37 Tranches from Nine Cash Flow & Hybrid CDOs-----------------------------------------------------------------Standard & Poor's Ratings Services lowered its ratings on 37 tranches from nine U.S. cash flow and hybrid collateralized debt obligation transactions. S&P removed 20 of the lowered ratings from CreditWatch with negative implications. The ratings on 17 of the downgraded tranches are on CreditWatch with negative implications, indicating a significant likelihood of further downgrades. The CreditWatch placements primarily affect transactions for which a significant portion of the collateral assets currently have ratings on CreditWatch with negative implications or have significant exposure to assets rated in the 'CCC' category.

The 37 downgraded U.S. cash flow and hybrid tranches have a total issuance amount of $8.161 billion. Five of the nine affected transactions are mezzanine structured finance CDOs of asset-backed securities, which are collateralized in large part by mezzanine tranches of residential mortgage-backed securities and other SF securities. Four of the nine transactions are high-grade SF CDOs of ABS, which were collateralized at origination primarily by 'AAA' through 'A' rated tranches of RMBS and other SF securities. The CDO downgrades reflect a number of factors, including credit deterioration and recent negative rating actions on U.S. subprime RMBS.

To date, including the CDO tranches and including actions on both publicly and confidentially rated tranches, S&P has lowered its ratings on 3,884 tranches from 878 U.S. cash flow, hybrid, and synthetic CDO transactions as a result of stress in the U.S. residential mortgage market and credit deterioration of U.S. RMBS. In addition, 1,278 ratings from 451 transactions are currently on CreditWatch with negative implications for the same reasons. In all, S&P has downgraded $452.023 billion of CDO issuance. Additionally, S&P's ratings on $30.992 billion of securities have not been lowered but are currently on CreditWatch with negative implications, indicating a high likelihood of future downgrades.

* S&P Chips Ratings on 49 Classes from 20 US Subprime RMBS----------------------------------------------------------Standard & Poor's Ratings Services lowered its ratings on 49 classes from 20 U.S. subprime residential mortgage-backed securities transactions issued between 2001 and 2006 from the following issuers: Amortizing Residential Collateral Trust, First Franklin Mortgage Loan Trust, CWABS Asset Backed Certificates Trust, MESA Global Issuance Co., and Popular ABS Mortgage Pass-Through Trust. S&P removed two of the lowered ratings from CreditWatch with negative implications and lowered 33 classes to 'D' due to principal write-downs. In addition, S&P affirmed 18 ratings from three of the downgraded Amortizing Residential Collateral deals and five of the First Franklin Mortgage Loan Trust transactions.

The downgrades, affirmations, and CreditWatch resolutions are based on the transactions' current and projected losses based on the dollar amounts of loans currently in the delinquency, foreclosure, and real estate owned pipelines of the affected deals, as well as its future-default projections. S&P also incorporated cumulative losses to date in its analysis.

The lowered ratings reflect S&P's belief that the amount of available credit enhancement for the downgraded classes is not sufficient to cover losses at the previous rating levels. S&P based its loss projections for these deals on cumulative losses to date, performance pipelines, and pool factors. Approximately half of the transactions, including the Amortizing Residential Collateral trusts and a portion of the First Franklin Mortgage Loan trusts, had pool factors below 10%.

Of these transactions, cumulative losses to date have been roughly 2.50% and 1.50% for the Amortizing Residential Collateral Trust deals and the First Franklin Mortgage Loan Trust transactions, respectively. Of the transactions with low pool factors, severe delinquencies averaged roughly 20% of the current pool balances.

The affirmations reflect sufficient credit enhancement to support the ratings at their current levels.

The subordination of more-junior classes provides credit support for the affected transactions. Additionally, structural mechanisms including overcollateralization, when available, and excess interest are used to absorb losses and/or accelerate payments to certain securityholders. The collateral backing the affected trusts originally consisted predominantly of subprime fixed- or adjustable-rate mortgage loans on one- to four-family residential properties.

S&P monitors these transactions over time to incorporate updated losses and delinquency pipeline performance to determine whether the applicable credit enhancement features are sufficient to support the current ratings. S&P will continue to monitor these deals and take additional rating actions as appropriate.

* S&P Trims Ratings on 79 Tranches from 22 Cash Flow & Hybrid CDOs------------------------------------------------------------------Standard & Poor's Ratings Services lowered its ratings on 79 tranches from 22 U.S. cash flow and hybrid collateralized debt obligation transactions. S&P removed 49 of the lowered ratings from CreditWatch with negative implications. The ratings on 23 of the downgraded tranches are on CreditWatch with negative implications, indicating a significant likelihood of further downgrades. The CreditWatch placements primarily affect transactions for which a significant portion of the collateral assets currently have ratings on CreditWatch with negative implications or have significant exposure to assets rated in the 'CCC' category.

The 79 downgraded U.S. cash flow and hybrid tranches have a total issuance amount of $10.596 billion. Fourteen of the 22 affected transactions are mezzanine structured finance CDOs of asset-backed securities, which are collateralized in large part by mezzanine tranches of residential mortgage-backed securities and other SF securities. Five of the 22 transactions are high-grade SF CDOs of ABS, which were collateralized at origination primarily by 'AAA' through 'A' rated tranches of RMBS and other SF securities. The other three transactions are CDOs of CDOs that were collateralized at origination primarily by notes from other CDOs, as well as by tranches from RMBS and other SF transactions. The CDO downgrades reflect a number of factors, including credit deterioration and recent negative rating actions on U.S. subprime RMBS.

At the same time, S&P lowered its rating on one tranche from one U.S. synthetic CDO transaction. The downgraded U.S. synthetic CDO tranche has a total issuance amount of $100 million.

To date, including the CDO tranches listed below and including actions on both publicly and confidentially rated tranches, S&P has lowered its ratings on 3,875 tranches from 877 U.S. cash flow, hybrid, and synthetic CDO transactions as a result of stress in the U.S. residential mortgage market and credit deterioration of U.S. RMBS. In addition, 1,294 ratings from 454 transactions are currently on CreditWatch with negative implications for the same reasons. In all, S&P has downgraded $449.414 billion of CDO issuance. Additionally, S&P's ratings on $33.261 billion of securities have not been lowered but are currently on CreditWatch with negative implications, indicating a high likelihood of future downgrades.

The downgrades, affirmations, and CreditWatch resolutions incorporate the current and projected losses based on the dollar amounts of loans currently in the delinquency, foreclosure, and real estate owned pipelines, as well as S&P's projection of future defaults. S&P also incorporated cumulative losses to date in its analysis when determining ratings outcomes.

The lowered ratings reflect S&P's belief that the amount of credit enhancement available for the downgraded classes is not sufficient to cover losses at the previous rating levels. Total delinquencies ranged from approximately 10% to 30%, and cumulative losses to date were generally less than 1.0%. Delinquencies tended to be highest for the Lehman XS, Luminent, and Bear Stearns Mortgage Funding trusts, and lower for the WaMu transactions. Although cumulative losses for most of these transactions have been relatively low, S&P is projecting an increase in losses due to increases in delinquencies and the current condition of the housing market. Additionally, due to the negative amortization feature, losses may be amplified relative to those for standard forward mortgages if the balances of those particular loans should grow.

The affirmations reflect sufficient credit enhancement to support the ratings at their current levels. Certain senior classes also benefit from senior support classes that would bear any applicable losses before the losses could affect the super-senior certificates.

The subordination of more-junior classes within each structure provides credit support for the affected transactions. Additionally, some of the structures use overcollateralization and excess spread to absorb losses and accelerate payments to certain securityholders. Certain classes also utilize certificate insurers as credit enhancement. The collateral backing the affected trusts originally consisted predominantly of Alternative-A, first-lien, adjustable-rate, negative-amortization residential mortgage loans on one- to four-family properties.

S&P monitors these transactions over time to incorporate updated losses and delinquency pipeline performance to determine whether the applicable credit enhancement features are sufficient to support the current ratings. S&P will continue to monitor these transactions and take additional rating actions as appropriate.

* S&P Trims Ratings on 110 Cert. Classes from 46 US Subprime RMBS-----------------------------------------------------------------Standard & Poor's Ratings Services lowered its ratings on 110 classes of mortgage pass-through certificates from 46 U.S. subprime residential mortgage-backed securities transactions. S&P removed two of the lowered ratings from CreditWatch with negative implications. Concurrently, S&P affirmed its ratings on four classes from RASC Series 2004-KS11 Trust.

The lowered ratings reflect the deterioration of available credit support for the affected transactions as well as S&P's loss expectations based on the dollar amount of loans currently in the delinquency pipelines. Overcollateralization has been completely depleted for these deals due to recent losses. This O/C deficiency caused a principal write-down on 67 classes, which prompted us to downgrade them to 'D'. A breakdown of the rating transitions for the classes downgraded to 'D':

As of the Sept. 25, 2008, remittance date, cumulative losses for the transactions with lowered ratings ranged from 1.71% to 16.12% of the original pool balances. Total delinquencies ranged from 17.3% to 60.16% of the current pool balances, while severe delinquencies ranged from 10.56% to 56.05% of the current pool balances. As of the September 2008 remittance period, severe delinquencies outpaced current credit support on average 2.63x for the downgraded classes.

The affirmations reflect current and projected credit support percentages that are sufficient to maintain the ratings at their current levels. As of the September 2008 remittance report, credit support for these classes ranged from 46.86% to 93.88% of the current pool balance. In comparison, the ratio of current credit enhancement to original 'AAA' enhancement ranged from 2x to 4x.

A combination of subordination, excess interest, and O/C provide credit enhancement for these transactions. The collateral for these series originally consisted of subprime pools of fixed- and adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties.

* S&P Chips Ratings on 193 Classes from 24 RMBS Transactions------------------------------------------------------------Standard & Poor's Ratings Services lowered its ratings on 193 classes from 24 residential mortgage-backed securities transactions backed by U.S. negative-amortization (Neg-Am) Alternative-A mortgage loan collateral issued in 2006 and 2007. The downgraded classes have a current balance of approximately $5.66 billion. S&P removed 95 of the lowered ratings from CreditWatch with negative implications. S&P downgraded class B-5 from Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2006-AR1 to 'D' due to a principal write-down to the class. In addition, S&P affirmed its ratings on 127 classes and removed 22 of the affirmed ratings from CreditWatch negative.

The downgrades reflect its opinion that projected credit support for the affected classes is insufficient to maintain the previous ratings given S&P's current projected losses, as stated in "S&P Publishes Revised Projected Losses For '06/'07 U.S. Alt-A Short-Reset Hybrid, Neg-Am RMBS," published Aug. 20, 2008, on RatingsDirect.

S&P arrived at its estimated projected losses for the Alt-A RMBS deals using the analysis outlined in "Standard & Poor's Revised Default And Loss Curves For U.S. Alt-A RMBS Transactions," published Dec. 19, 2007, on RatingsDirect. The revised loss assumptions used in this review also include S&P's new loss severity assumptions, which it outlined in "Criteria: Standard & Poor's Revises U.S. Subprime, Prime, And Alternative-A RMBS Loss Assumptions," published on July 30, 2008, on RatingsDirect.

As part of S&P's analysis, it considered the characteristics of the underlying mortgage collateral as well as macroeconomic influences. For example, the risk profile of the underlying mortgage pools influences S&P's default projections, while its outlook for housing price declines and the health of the housing market influence its loss severity assumptions.

To assess the creditworthiness of each class, S&P reviewed the individual delinquency and loss trends of each transaction for changes, if any, in risk characteristics, servicing, and the expected ability to withstand additional credit deterioration. In order to maintain a rating higher than 'B', a class had to absorb losses in excess of the base-case assumptions S&P assumed in its analysis. For example, a class may have to withstand approximately 115% of S&P's base-case loss assumptions in order to maintain a 'BB' rating, while a different class may have to withstand approximately 125% of its base-case loss assumptions to maintain a 'BBB' rating. A class that has an affirmed 'AAA' rating can likely withstand approximately 150% of its base-case loss assumptions under S&P's analysis, subject to individual caps and qualitative factors assumed on specific transactions.

S&P also took into account the pay structure of each transaction and only stressed classes with losses that would occur while they remained outstanding.

Additionally, S&P only gave excess interest credit for the amount of time the classes would be outstanding. For example, if S&P projected a class to pay down in 15 months, then it only applied 15 months of losses to that class. Additionally, in such a case S&P assumed 15 months of excess spread if the class was structured with excess spread as credit enhancement.

In the coming weeks, Standard & Poor's will continue to analyze the remaining transactions affected by its revised loss expectations. S&P will analyze deals in order of performance, looking at worse-performing deals first.

* S&P Downgrades Ratings on 331 Classes from 22 RMBS Transactions-----------------------------------------------------------------Standard & Poor's Ratings Services lowered its ratings on 331 classes from 22 residential mortgage-backed securities transactions backed by U.S. hybrid Alternative-A mortgage loan collateral issued in 2006 and 2007. The downgraded classes have a current balance of approximately $3.496 billion. S&P removed 248 of the lowered ratings from CreditWatch with negative implications. In addition, S&P affirmed its ratings on 61 classes and removed 18 of the affirmed ratings from CreditWatch negative.

The downgrades reflect S&P's opinion that projected credit support for the affected classes is insufficient to maintain the previous ratings, given its current projected losses as stated in "Revised Projected Losses For 2006/First-Half 2007 U.S. Alt-A Short-Reset Hybrid And Neg-Am RMBS," published Aug. 20, 2008, on RatingsDirect. S&P arrived at its estimated projected losses for the Alt-A RMBS deals using the analysis outlined in "Standard & Poor's Revised Default And Loss Curves For U.S. Alt-A RMBS Transactions," published Dec. 19, 2007, on RatingsDirect.

The revised loss assumptions used in this review also include the new loss severity assumptions, which were outlined in " Criteria: Standard & Poor's Revises U.S. Subprime, Prime, And Alternative-A RMBS Loss Assumptions," published on July 30, 2008, on RatingsDirect.

As part of S&P's analysis, it considered the characteristics of the underlying mortgage collateral as well as macroeconomic influences. For example, the risk profile of the underlying mortgage pools influences S&P's default projections, while its outlook for housing price declines and the health of the housing market influence its loss severity assumptions.

To assess the creditworthiness of each class, S&P reviewed the individual delinquency and loss trends of each transaction for changes, if any, in risk characteristics, servicing, and the expected ability to withstand additional credit deterioration. In order to maintain a rating higher than 'B', a class had to absorb losses in excess of the base-case assumptions S&P assumed in its analysis. For example, one class may have to withstand approximately 115% of S&P's base-case loss assumptions in order to maintain a 'BB' rating, while a different class may have to withstand approximately 125% of its base-case loss assumptions to maintain a 'BBB' rating.

A class that has an affirmed 'AAA' rating can likely withstand approximately 150% of its base-case loss assumptions under S&P's analysis, subject to individual caps and qualitative factors assumed on specific transactions.

S&P also took into account the pay structure of each transaction and only stressed each class with losses that would occur while it remained outstanding. Additionally, S&P only gave excess interest credit for the amount of time the class would be outstanding. For example, if S&P projected a class to pay down in 15 months, then it only applied 15 months of losses to that class. Additionally, in such a case S&P assumed 15 months of excess spread if the class was structured with excess spread as credit enhancement.

In the coming weeks, Standard & Poor's will continue to analyze the remaining transactions affected by its revised loss expectations. S&P will analyze deals in order of performance, looking at worse-performing deals first.

* Volatile Oil Prices Stress NA Transportation Companies, S&P Says------------------------------------------------------------------Volatile oil prices and a slowing global economy continue to squeeze many North American transportation companies, according to an industry credit outlook published by Standard & Poor's Ratings Services. "The most serious threat has shifted recently from very high oil prices to a likely U.S. recession and slowing global growth," said Standard & Poor's credit analyst Philip Baggaley. Airlines, car rental companies, and truckers have been the hardest hit. But these energy and economic trends have also hurt parcel-express companies and some shipping sectors, albeit to a lesser extent, according to the report, "High Fuel Prices And Global Economic Weakness Slow North American Transportation Companies."

Railroads are in a better position than most other transportation companies, thanks to the strength in the coal and agriculture sectors, productivity and yield improvements, and fuel-recovery mechanisms. The report notes that leasing companies that serve the various transportation sectors are seeing softer demand, but, with the exception of car rental companies, most have been able to manage the downturn fairly well by reducing capital expenditures and using internal cash flow to pay down debt.

"The extraordinary financial events of recent weeks create enormous challenges for companies of every size and in every business," Charles K. O'Neill, Chadbourne's managing partner, said. "Our senior partners are pooling their knowledge and experience in the key areas of litigation, bankruptcy and restructuring, corporate and securities, insurance and reinsurance, structured finance, real estate and tax to respond proactively to our clients' needs."

Chadbourne will draw on the extensive experience of New York partners Howard Seife, Joseph Smolinsky and David LeMay (bankruptcy and financial restructuring), Thomas Hall and Alan Raylesberg (financial institution and securities litigation), Andrew Coronios and Marian Baldwin (structured finance), Charles Hord and Marc Alpert (corporate and securities), Lawrence Plotkin (real estate), William Cavanagh (tax) and John Sarchio (insurance and reinsurance), and special counsel Richard Liskov (insurance regulatory). The practice will also include the firm's London bankruptcy and financial restructuring team, led by partner Adrian Harris.

"The economic and legal consequences of the financial crisis in the United States and abroad will require comprehensive legal advice over the next several years," Mr. Seife said.

"We expect a significant increase in actions on debt and other credit obligations, insolvencies, forced sales of secured assets, class action and securities litigation, restructurings in the financial and insurance sectors, as well as complications arising from increased regulation, Mr. Hall added."

About Chadbourne & Parke LLP

Headquartered in New York City, Chadbourne & Parke LLP --http://www.chadbourne.com/-- provides a full range of legal services, including mergers and acquisitions, securities, project finance, private equity, corporate finance, energy, communications and technology, commercial and products liability litigation, securities litigation and regulatory enforcement, special investigations and litigation, intellectual property, antitrust, domestic and international tax, insurance and reinsurance, environmental, real estate, bankruptcy and financial restructuring, employment law and ERISA, trusts and estates and government contract matters. Major geographical areas of concentration outside the United States include Central and Eastern Europe, Russia and the CIS, the Middle East, Latin America and Canada. The firm has offices in New York, Washington, DC, Los Angeles, Houston, Mexico City, London (a multinational partnership), Moscow, St. Petersburg, Warsaw, Kyiv, Almaty, Dubai and Beijing.

This new book is the definitive work on distressed investment banking by two widely acknowledged leaders in this field.

Dealing with the restructuring of troubled companies, an insider's view is provided on the methods and complexities of this fascinating area of investment banking.

It demystifies what investment bankers really do and conveys difficult concepts in easily understandable terms.

Particular focus is directed to unconflicted advice to boards of directors interested in recoveries of shareholders.

Attorneys, accountants, crisis mangers, business students, judges, and investment bankers -- as well as management and directors of distressed companies -- all will find this book of interest.

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Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities.Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report.

Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test.

A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/

On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format.

Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today.

Monthly Operating Reports are summarized in every Saturday edition of the TCR.

For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852.

This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed.

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